Route 21 Corporate Park

Big gap between A and B grade buildings

Rental vacancies in the commercial property sector are generally found in the B grade building sector, while vacancies in A grade buildings or offices are far less – a trend that will continue, or escalate, said Org Geldenhuys, MD of property development and management company, Abacus  DIVISIONS.

“In the A grade buildings, or office parks, landlords are less open to negotiating price as there is a higher demand for these better quality buildings. The majority of A grade buildings are also located inside secure office parks – another draw card for landlords.”

He noted, however, that while lower grade buildings were less sought after, there was a bigger pool to choose from. This was to the advantage of prospective tenants – and landlords are often hard-pressed to receive the rentals they desire.

Geldenhuys said the disparity between A and B grade buildings will continue, adding that the “price gap might widen”.

“Tenants are looking for buildings that offer features such as fibre optics, state of the art security and good locations – and they are prepared to pay a bit extra.”

He said owners of B grade buildings – or office parks – must seriously consider various upgrades if they are to reduce their vacancies.

“But it is a horse and cart situation. While upgrading will increase their popularity, owners of B grade buildings have already been cash-squeezed – so are a bit out of pocket when it comes to the costs of improvements.”

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