The Tower Property funds focussed strategy, which differs from the typical approach to office asset management, has paid off for one building within the portfolio.
6 and 8 Sturdee Avenue are twin office blocks located in the heart of Rosebank which are occupied by Sasol and several other smaller tenants.
“Sasol is currently building its much publicised new campus in Sandton which left potential vacancies in this Tower property,” explains Bruce Rogerson, Executive Director of Tower Asset Managers. “Tower’s management adopted a specific strategy in marketing the space to medical suites as the property is adjacent to the very popular Netcare hospital. By directly targeting the medical community who make use of the hospital, vacancies have reduced to zero with above market rentals.”
“Whilst Sasol Group Services occupies a significant chunk of the offices, there is a strong demand for the space from the neighbouring Netcare Hospital and other medically related businesses and we foresee a potential to turn one of the Sturdee buildings into dedicated medical suites.”
Rogerson explains that the buildings desirable location has also played a role in its popularity. “The property abuts the new Rosebank Mall and is two blocks away from the new multi-billion rand Standard Bank offices and the Rosebank Gautrain Station.”
The buildings, which each measure approximately 3 400 sqm in size were refurbished four years ago and are in excellent condition,providing flexible office space with ample parking. Access to the abundance of retail amenities is all within walking distance.
Rogerson says that the current vacancy rates in Rosebank are testament to the areas popularity as a central office node. “Vacancy rates are down to 2.7% and asking rentals for A grade office space is up at R200/sqm, and for B Grade space up to R140/sqm. 6 and 8 Sturdee avenue are well positioned to remain competitive against these levels and is comfortably achieving R140/sqm.”
Rosebank has become increasingly popular and is one of the city’s fastest growing development nodes following its inclusion in the Gautrain route and a surge in infrastructure upgrades in the area.
“This increase in popularity can be attributed to corporates such as Standard Bank increasingly investing in the precinct and upgrades made to the Rosebank Mall and Netcare Rosebank Hospital,” says Rogerson. “The Gautrain has also boosted development in the area. In addition, the close proximity of Rosebank to Johannesburg and Sandton has long been an important selling point. OR Tambo International is only a short distance away by road and is also easily accessed via the Gautrain, as is Pretoria.”
“From the beginning Tower was confident that these buildings would easily achieve low vacancies and high rentals, and our strategy of gearing the space towards the medial professionals from the Netcare Hospital has been a successful one,” says Marc Edwards, CEO of the Tower Property Fund.
Tower listed on the JSE in July 2013 and has made steady progress since listing, with the funds asset base continuing to grow in order to diversify and mitigate against normal risks within a property portfolio. The fund recently took advantage of a lower yield curve to fix a larger percentage of its debt and now has 71% of its debt fixed.