Property owners target SMEs
LIVINGSTONE MARUFU
The majority of property owners in the central business district (CBD) of Harare and Bulawayo are converting their large buildings to accommodate Small to Medium Enterprises (SMEs) as a result of large companies leaving the area and moving to the suburbs, a new report has shown.
In its latest report for the real estate sector, Inter-Horizon, said CBD offices were the worst-performing category.
An abundance of CBD office buildings has resulted from a more noticeable exodus of large corporates moving into residential areas near the city center such as Eastlea, Hillside, Milton Park, Belgravia, and Avondale in Harare.
As a result, CBD offices have had high vacancy rates.
However, the influx of SMEs in Harare and Bulawayo has given the CBD buildings a lifeline.
“CBD property owners have been repurposing their buildings to accommodate small and medium sized enterprises. Consequently, vacancy rates have remained high because demanded space is smaller,” part of the Inter-Horizon report reads.
It continued: “Moving forward, we expect big companies and other formal businesses to continue moving from the CBDs to suburban offices where there is freedom from over-zealous parking attendants and touts and companies can provide individual water and backup power solutions. The off-takers of the vacant space will be SMEs.
“We expect continued repurposing of office buildings in the Harare and Bulawayo CBDs due to the growth of the wholesale and retail sector. The wholesale and retail sector, which is the biggest contributor to the GDP at 20.7%, has shown 10.9% growth on a year-on-year basis.
“Therefore, we expect the demand for small spaces to increase and occupancy levels in the CBDs to improve.”
The report said the demand for suburban offices has boomed, and their high average occupancy rate has also increased.
“Most landlords in the northern suburbs are experiencing a 100% occupancy rate for their spaces. Market rentals in suburban parks range between US$8.00 and US$13.00 per square metre per month,” the report said.
On the other hand CBD office rental rates range between US$5.00 and US$8.00 per square metre per month depending on the size and the state of the space.
