Office Market Report Umhlanga/, KwaZulu-Natal

April 2019

Broll Insight

Accessibility Amenities The combined Umhlanga and La Lucia node is Amenities include retail and medical facilities, banks, accessible from the highway via the M41, with La conference facilities and hotels. The Umhlanga New Lucia south and Umhlanga north of the M41. Since the Town Centre, in particular, hosts a large hospitality recent completion of the major N2 intersection sector. The area known as Umhlanga Village (between upgrade, congestion to/from the area has been the and the beachfront, around Chartwell Drive) is significantly lessened. Additionally, a new ‘fly-over’ the premier restaurant and bar district with the from Cornubia into Umhlanga via Umhlanga Ridge beachfront and promenade being major additional Boulevard has also been completed. This further attractions to tourists and locals alike. Gateway Theatre lightens the traffic burden in the area and includes an of Shopping is a popular retail destination, while on-ramp from the N2 South (King Shaka Airport) Cornubia Mall opened its doors at the end of 2017. directly into Umhlanga, acting as an alternative to the Nedbank’s Park Square also boasts a 5,500m² retail main M41 intersection. component focussed at the convenience shopper. With Makro Cornubia, measuring 20,000m² and being the Aesthetic Appeal first tenant in the Cornubia Logistics Park, having successfully opened its doors at the end of March 2019. Approximately 76% of total stock is A-grade with many buildings having sea views and attractively landscaped gardens. Building height restrictions are notably more Security generous in the Ridgeside district with high quality, The node is well established and secure. Most landlords Premium grade designs becoming evident in newer have enlisted private security companies, with the developments such as Pran Boulevard (KPMG Umhlanga Urban Improvement Precincts (UIPs) and HQ), Nedbank’s Park Square and the new Umhlanga Ridge Management Association (RMA) providing Arch. additional sub-contracted private security throughout the node. Many buildings are located within secure Affordability office parks with boom gate access, 24-hour security guards and electric fences. P-grade: R175 – R205/m²/month gross achieved

A-grade: R155 – R165/m²/month gross achieved

Park Square

OFFICE MARKET REPORT – UMHLANGA/LA LUCIA ______Page 2

Availability of Space Take-up Vacancies in the region vary depending on building type • The node is experiencing slower levels of market and/or location. Although they make up a small activity for both sales and leasing. percentage of the total office stock, P-grade spaces are • The trend amongst medium to large occupiers is to around 24.5% vacant, followed by B-grade at 7.8% and downsize their office requirements and embrace A-grade at 6.6%. Overall, the node records an average modern office trends of more flexible office vacancy rate of 9.5%. environments, including hot desking, and encouraging employees to work from home to Highlights reduce costs. • Call centres continue to be some of the largest

occupiers of space, particularly in Umhlanga New Trends Town Centre, contributing to the increased • Until recently most development has been tenant- development activity. A number of call centre driven, resulting in an equilibrium in supply and businesses have moved to demand. However, this trend appears to be shifting attracted by lower rentals and building availability. and another cyclical oversupply of offices is evident. As building and land prices increase, as Tenants well as the perceived value of sea views; rentals are • The node has become home to a large number of reaching and exceeding those of Sandton in blue-chip tenants such as Discovery, Aspen Johannesburg in certain instances. Pharmaceuticals, KPMG, ABSA, EY, Deloitte, • Until recently Ridgeside was purely commercial in Vodacom, AECOM etc. nature, however multiple residential and mixed- • The Umhlanga New Town Centre area, adjoining use developments are underway and will house the Gateway Theatre of Shopping, tends to be internationally-branded hotels, adding to the popular with call centre-type businesses and prestige, allure and convenience of the node as well educational facilities. as embodying the ‘live, work, play’ concept. • Umhlanga is fast taking on the appearance of a new • Retail amenities are in abundant supply with CBD and houses a wide range of businesses, from multiple offerings found in the node, most notably those operating from shared workspaces to the completion of Nedbank’s Park Square which corporate offices and regional head office facilities. comprises 5,500m² of retail space. • The combined Umhlanga/La Lucia node has set the The Boulevard trend for the Greater Durban area in pioneering urban management initiatives (UIPs and RMA) as partnerships between the private sector and the City.

OFFICE MARKET REPORT – UMHLANGA/LA LUCIA ______Page 3

Market Overview Umhlanga), the area north of the M41 referred to as Umhlanga Ridgeside and the third distinct area

surrounding the Umhlanga New Town Centre. The combined Umhlanga and La Lucia office node is well-located with easy access to national roads and While the Umhlanga New Town Centre enjoys access to major arterials. The node is a short drive into Durban a larger variety of amenities owing to its mixed-use central and less than 15 minutes from King Shaka characteristics, retail and medical amenities are located International Airport - which now offers direct in close proximity to all three areas. Furthermore, a international flights into London - and the Dube Trade number of new hotels are found in the Umhlanga New Port Cargo Terminal. Town Centre area as well as in Ridgeside and in

Umhlanga Village in more recent times. Sections of the major N2 highway intersection upgrade have recently been completed and have played a large The La Lucia Office Parks area is well established, secure role in easing traffic congestion within the node. and very popular with businesses looking for, generally Additional access is in the form of the Cornubia link smaller, A- and B-grade offices in “park-like” environs bridge and interchange which provides direct access that lack the access to amenities of the New Town from Cornubia into Umhlanga New Town Centre, with Centre precinct. Some of the older buildings in this area Umhlanga Ridge Boulevard extended over the N2 have either been refurbished to A-grade or are in the highway. This will also form part of the City of Durban's process of being refurbished. Those buildings that have Integrated Rapid Public Transport Network, GO! not been upgraded are becoming B-grade as a result of Durban, which will further enhance accessibility within their age. Blue-chip tenants in some of these buildings the region. While there has been some talk of a rail include Discovery, Aspen Pharmaceuticals, EY and linkage this, if it is planned, is not anticipated to happen Deloitte. in the foreseeable future.

Umhlanga Ridgeside, which has seen substantial recent The Umhlanga and La Lucia node may be regarded as developments, is regarded as the more prestigious one geographically continuous area often referred to as office location where buildings have scenic sea views. simply Umhlanga. However, it can be divided into three Corporates such as Absa Bank, KPMG, Investec, main areas, namely: the La Lucia Office Parks located Vodacom, AECOM, FNB and Illovo Sugar are situated south of the M41 (which divides La Lucia from within the area. Whilst Ridgeside is predominantly

Park Square

OFFICE MARKET REPORT – UMHLANGA/LA LUCIA ______Page 4

made up of commercial users, a number of residential Construction Activity developments have been launched and are under An increased number of P-grade offices have recently construction. come onto the market and many new additional office developments are scheduled to be completed in the The Umhlanga New Town Centre area adjoins Gateway next 12 months. This new space, is expected to create Theatre of Shopping and is mixed-use in nature, numerous quality opportunities for blue chip tenants comprising offices, retail, hospitality, healthcare and for the foreseeable future. However, the impact of residential properties. current economic conditions on the take-up of space as well as the resistance to higher rentals is becoming The success of the combined Umhlanga and La Lucia evident. node continues to attract blue-chip tenants including national and international companies, banking and insurance companies as well as many prestigious local Concluding Remarks and international professional services businesses. The relocation of King Shaka International Airport to La The La Lucia Office Parks area has reached maturity and Mercy has seen many corporates, particularly global has been stable over recent years without significant companies seeking offices within this node owing to its movement or development. By contrast, the enormous

location and easy access to and from the airport. amount of development across all categories (office, retail, residential and hotel), in both Umhlanga Mount Edgecombe and the newer Cornubia areas north Ridgeside and New Town Centre as well as of the N2 contain a number of existing offices and new neighbouring Cornubia and the Sibaya Precinct to the office development opportunities. The extent to which north, is expected to create opportunities in the form the area starts to compete with the Umhlanga/La Lucia of jobs and economic stimulation. It is also expected to node over time remains to be seen. drive property sales and leasing transactions while simultaneously transforming the landscape of KwaZulu- Grade Overview Natal’s coastline. The addition of direct international flights into London further strengthens Durban and its P-grade A-grade B-grade northern areas prominence as a growth area and Space in Demand 200 – 100 – 400 – investment destination. New and exciting opportunities (m²) 1,000 2,000 8,000 for tenants and landlords alike are expected to become Gross Asking Rent 205 – 155 – 120 – evident. (R/m²/month) 215 180 135

Gross Achieved 175 – 155 – 120 – Rent (R/m²/month) 205 165 135

Rent Escalation (%) 8% 8% 8%

Typical Lease 3 – 5 3 – 5 3 – 5 Period (years)

OFFICE MARKET REPORT – UMHLANGA/LA LUCIA ______Page 5

Umhlanga/La Lucia, KwaZulu-Natal Listings

The Boulevard Park Square Gross Asking Rent Gross Asking Rent R175 R191 – R222 (R/m²/month) (R/m²/month) Size of units Size of units 400 – 500 135 – 2,000 available (m²) available (m²) Lease Period Lease Period 36 – 60 36 – 60 (months) (months)

Availability Immediately Availability Immediately

Click here for further listing in Umhlanga/La Lucia

Disclaimer Broll Property Group (PTY) Ltd has taken every care in the preparation of this report. The sources of information used are believed to be accurate and reliable, but no guarantee of accuracy or completeness can be given. Neither Broll Property Group, nor any director, representative or employee of Broll Property Group, accepts liability for any direct or consequential loss arising from the use of this document or its content. The information and opinions contained in this report are subject to change without notice. No part or parts of this report may be stored in a retrieval system or reproduced or transmitted in any form or by any means, electronic, mechanical, reprographic, recording or otherwise, now known or to be devised, without prior consent from Broll Property Group.

OFFICE MARKET REPORT – UMHLANGA/LA LUCIA ______Page 6

Intel Report Contact Details

Divisional Director Divisional Director Area Specialist Broll Property Intel Broking Mitch Cowie Elaine Wilson Frank Reardon +27 31 362 1700 +27 11 441 4083 +27 31 362 1721 +27 82 566 5600 [email protected] +27 83 284 9119 [email protected] [email protected] Researcher Daniella Martino +27 11 441 4075 [email protected]

Head Office & Country Contact Details

Broll Property Group (PTY) Ltd Broll Kenya Broll Nigeria (Head Office) Physical address: Westlands Business Physical address: 6th Floor, ED Physical Address: 61 Katherine Park, Acacia Block, Ground Floor, Building, 47 Marina, Lagos Island, Street, Sandown Ext. 54, Sandton. Waiyaki Way, Nairobi. Lagos. Phone: +27 11 441 4000 Phone: +254 712 668 448 Phone: +234 1 270 1890 Email: [email protected] Email: [email protected] Fax: +27 11 441 4452 Website: www.broll.co.ke Website: www.broll.com.ng Email: [email protected] LinkedIn: Broll Property Group Broll Malawi Broll South Africa Twitter: @Broll_insights Physical address: Kabula House, Physical address: 61 Katherine Website: www.broll.com Ground Floor, Chilembwe Road, Street, Sandown Ext. 54, Blantyre. Johannesburg. Broll Botswana Phone: +265 184 3311 Phone: +27 11 441 4000 Physical address: 1st Floor, The Hub, Email: [email protected] Email: [email protected] iTowers, Gaborone. Website: www.broll.co.mw Website: www.broll.com Phone: +267 398 1973 Email: [email protected] Broll Mozambique Broll Uganda Physical address: Rua Mateus, Physical address: The Acacia Mall, Broll Ghana Sansao Muthemba, Maputo. 4th Floor, Plot 14-18 Cooper Road, Physical address: 7th Floor, Ridge Phone: +258 21 496 852 Kampala. Tower, 6th Avenue, Ridge, Accra. Email: [email protected] Phone: +256 312 531 500 Phone: +233 302 672 888 Website: www.broll.co.mz Email: [email protected] Broll Zambia Website: www.brollghana.com Broll Namibia Physical address: Manda Hill Mall, Physical address: Zanlumor Building, Cnr Great East and Manchinchi Broll Indian Ocean (Madagascar, 2nd Floor, Post Street Mall, Roads, Lusaka. Mauritius, Seychelles & Réunion) Windhoek. Phone: +260 21 125 5550 Physical address: Unit 3, 6th floor, Phone: +264 6 137 4500 Email: [email protected] Barclays House, Cybercity, Ebène. Email: [email protected] Website: www.broll.co.za Phone: +230 468 1222 Website: www.brollnamibia.com.na Email: [email protected] Website: www.broll-io.com

OFFICE MARKET REPORT – UMHLANGA/LA LUCIA ______Page 7