Uniting landlord and tenant for long-term financial gain
There are numerous stories of doom and gloom across the local commercial property sector; however, experts agree that it remains one of the most stable investment opportunities if a long-term view is adopted.
Every few years, the real estate market suffers a crash or a downturn, which underscores a perpetual dilemma for small-to-medium-sized businesses looking at investing in commercial real estate (CRE). Research indicates that entrepreneurs, small-business owners and corporates alike seek to wisely navigate both cost and risk in today’s volatile economy. There certainly is no one-size-fits-all strategy for purchasing or letting commercial property. However – with the right property partner, businesses can mitigate the associated risks, lower operating costs, evaluate total costs in real time and find the ideal commercial property.
How to choose a property partner you can trust
When choosing a commercial property partner, research reveals that online information about a developer’s publicly-traded property is a good indicator of credibility. Similarly, consulting industry peers and governing bodies should reveal the company’s reputation in the market – public opinion is a sound gauge of identifying how property developers and managers have instilled a sense of value and equity. It’s vital to explore the company’s experience spanning industrial, retail and mixed-use development and management. Delve into questions such as, which specific projects have they completed? Did they complete previous projects within a reasonable time frame? Do they take a future-focused approach when developing and managing property?
With an 85-year track record of symbiotic relationships between landlord and tenant, ALW is firmly rooted in the local property development and management sector, having constructed a number Johannesburg’s iconic developments. These include some of the city’s first high-rise residential apartments, many of which still stand today. ALW was also responsible for construction of the largest industrial buildings in Johannesburg at the time, Logg Square, as well as other commercial developments such as Grove City in Houghton, a bold commercial development consisting of seven multi-story office buildings. More recently ALW has completed a 9000 square metre superstore for Builders Warehouse in Northriding.
Buildings completed over the past 10 years have accommodated tenants such as Altech; The National Film and Video Foundation; Gestetner/Ricoh; Auto & General, Telesure, Power FM, VWSA Marketing and Macsteel to name a few.
Fast forward to 2016 and ALW is a registered member of the Green Building Council South Africa (GBCSA) with an intrinsic focus on constructing environmentally-sound buildings. ALW has successfully harnessed the international sustainable building trend with its flagship green office development, Atholl Towers, located at 129 Patricia Road in Sandton. This noteworthy and superbly located development has been awarded a 5 Star Green Star SA Office Design V1 rating certification by GBCSA and offers eco-conscious tenants an opportunity to rent a holistic green building while reaping long-term operating cost savings.
According to ALW, multiple studies demonstrate that environmentally-sustainable, certified buildings have higher occupancy rates and lower utility and operational costs. Gary Woolf, ALW’s Managing Director explains, “Water shedding is a reality and electricity supply is unstable in South Africa and this is coupled with constant price hikes – if investors can guarantee tenants lower cost of occupation through major saving benefits and off-the-grid operations, you have the highest chance of securing a solid return on investment.”
Gary comments that green-rated buildings deliver savings to the total cost of occupancy due to low building operating costs. “In the case of Atholl Towers, we specifically invested in keeping the operating costs as low as possible. While rental fees may be marginally higher, tenants save more in the long run when compared to renting a conventional building – paying two to three times more for electricity than they would at Atholl Towers. We are looking at a 9% increase in electricity in South Africa this year and a 15% increase next year, meaning that any savings in electricity costs would be a benefit to tenants. The targeted electrical consumption at Atholl Towers is around R10 per square metre,” says Gary.
Graham Cruickshanks, executive of the GBCSA says that it’s really exciting to see speculative offices now being built to a 5 Star Green Star SA standard as this supports the trend of certified green buildings becoming an integral and valued addition to property investor portfolios. This trend is supported by the IPD South Africa Annual Green Indicator which tracks the performance of properties with a top-quartile energy efficiency relative to the rest of the IPD Universe and in the year to December 2014 produced a total return of 12.1% as opposed to the rest of the IPD Universe which produced a total return of 9.4%.”
He added that the way businesses in South Africa are looking at office space is changing. “We’ve seen a shift in how businesses see commercial office space, with a leaning towards investing in green buildings which are not only better for the environment but also better for the people who occupy them. Better air quality and natural lighting have been proven, through local and international studies, to have a positive impact on the health, wellness and productivity of building occupants. Both of these features have been integrated into the design of Atholl Square and contribute towards the Green Star SA rating of the building”
Atholl Towers has implemented numerous innovative and eco-friendly features, making it a building that is both good for the planet and for tenants’ expense sheets. These features include an energy-efficient VRV air-conditioning system, rain and ground water harvesting systems, a waste recycling facility and Otis REGEN™ DRIVE energy-efficient elevator technology. In fact, at Atholl Towers, tenants can expect savings as much as 50% on electricity and water bills. The modern and iconic addition to Sandton’s skyline has approximately 7500m² of prime office space still available to let, with areas ranging from 90m2 (GLA) to 7,500m2 on the remaining four floors. MacSteel and MUR Shipping now occupy the top two floors of the office building and are both extremely satisfied with their choice.
Graeme Stilwell, ALW’s Portfolio Manager adds, “For us, property management is more than another branch of the business. As a third generation firm, we believe in personal service and we will manage your properties as if they were our own. To us, the tenant is everything and we pride ourselves on fostering prosperous and mutually-beneficial relationships with tenants, stakeholders and the brokerage community. We hope to attract clients who have a shared interest in resource sustainability that promises significant long-term financial benefits.”
About ALW Properties
ALW is a privately-owned property development and management company specialising in property development, project management and property administration in Johannesburg, Pretoria and the surrounding areas. ALW has over 85 years of experience in developing high quality developments, adding value to the portfolios we manage and growing mutually beneficial and longstanding relationships with tenants, stakeholders and the brokerage community.
We, as property developers and managers, are passionate about environmentally-conscious, innovative buildings which strive towards sustainable green living. As a member of the Green Building Council of South Africa (GBCSA), ALW is focused on a brighter, greener future.
Tel +27 (0) 11 728 7000 / +27 (0) 82 782 3327