Commercial property market will stagnant - and effectively reverse - in 2013

Anyone expecting 2013 to usher in even a modicum of fireworks in the commercial property market is going to be sorely disappointed as it is very likely that landlords are going to have to accept minimal rental increases and, in many cases, rentals might well remain pegged at 2012 prices.

This is according to Org Geldenhuys, managing director of Pretoria-based property development and marketing company, Abacus DIVISIONS, who said that if rates remain stagnant this effectively means the market is moving backwards - "which it now looks poised to do".

"The year has started off very slowly - far slower than most years we have experienced. Sure, the year has just started - but normally we have interest from the marketplace by this stage already.

"Moreover, we believe we are not going to see an increase in rates in the areas we work in. It looks like landlords - and property portfolios - are going to have to be satisfied with 2012 rates in many instances. How property owners interface with their tenants is going to have an impact on just how well they do in a market that continues to remain soft. One of the big trends that might possibly emerge in 2013 is the dropping of deposits.

Major property group, Growth Point, is the pioneer in this regard and late last year issued a press statement saying that they will not be asking new tenants to pay deposits. This will bring a major reprieve for tenants - and might galvanize more activity in the marketplace. But, in real terms, it does not translate into more money in the pockets of landlords. On the bright side, however, it could well lead to a decrease in vacancy levels, which may be the precursor for growth in the commercial property sector. But this will - at the soonest - only start emerging during the second quarter of 2014," said Geldenhuys.

He added that landlords will need to "find ways" to secure current tenants and to lure new ones. "This year will probably see a focus on holding onto current tenants and, hopefully, trying to attract new ones by offering some 'out of the box' marketing ideas."

Commenting further, Geldenhuys said that over and above doing away with deposits, some landlords are trying to lure tenants with increased tenant allowances and rent free periods. "We are also witnessing landlords providing incentives to brokers and agents of up to 200% of usual commission to expose vacant buildings to the brokers' client base - all in the hope of signing up tenants."

Article from: www.abacusdivisions.co.za

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