Viruly Consulting

If you think   that rentals  are high  in the standard South African Shopping centre , consider  retail rentals on the corner of Jeppe Street and Delvers Street in the Johannesburg CBD .

A recent  workgroup  co-ordinated  by  Hannah Le  Roux and sponsored by the Goethe  Institute  considered the dynamics around  certain  buildings in the Johannesburg inner city . What is interesting about these  buildings  is that they are  primarily let to  Ethiopian  retailers – in a sense creating an inner  city Ethiopian  retailing  precinct.   These buildings are also a clear illustration that  there is scope to convert  Johannesburg inner city   office space  into  high rent  yielding   multi storey retail space. This provides an interesting  alternative to the conversion office space  into residential space.

While   these multi –storey  retail buildings  may not  provide the  finishes found  in the average South African Shopping centre,  they  do provide   a  tenant mix , and rentals that suburban shopping centre investors  would be highly satisfied  with .  The Jo’burg  Mall , situated  on the corner of Delvers Street and Jeppe Street  offers  a one-stop  retailing experience that includes, food and clothing stores, restaurants, coffee shops, hair dressers and internet café’s.

For the retailer,  these properties  also provide    a   wide variety of  letting options.   While some  stores  are a mere two square metres ,  the  average store seem  to be in the region of  twenty  to thirty sqm .  The point  is  that the space  is reflective of  market needs  – generally  a  family  run store  in this particular environment would find it difficult to stock the standard  one hundred  sqm store.    Moreover   by focussing  on a few buildings  ,  Ethiopian  retailers  are reaping the advantages associated  with  the clustering of economic  activity . It  includes the creation of an environment in which economic activity can  happen  in safety.     

These buildings illustrate that a built environment that   responds to community needs and market dynamics has a  role to play in  stimulating economic  activity and urban regeneration – urban decay largely  sets in when this match has withered away .  The  high rentals  experienced in these converted  properties suggest that demand is well in excess of supply, and  It is likely that with time investors will recognise the  investment opportunity and  start supplying the market . The pace of  redevelopment will also  be affected  by the ability  that city authorities  have in  timeously identifying   and supporting community and market trends.

Francois Viruly