Renewals on 511, 923m2 valued at R1-billion were achieved, while new leases on 171,831m2 valued at R426-mllion were concluded.

ApexHi MD David Rice says 79% of the lettable area that expired in the year in review was renewed. The average renewal rental increased 14% from R38,14/m2 on expiry to R43,62/m2 on renewal. “While the retail renewal rentals only increased 9% due to some rental reversions, the office sector increased 19% and demand for space in the industrial sector resulted in increases in rentals of 30%,” he says.

Rice says the company’s strategy to focus on “tenant, tenant, tenant’ rather than “location, location, location” has contributed to the success of the renewal rate. “We focus on acquiring properties with A-grade tenants where the likelihood of renewal is high. 61% of the tenants in the ApexHi portfolio are government departments, parastatals, national retailers and large listed companies,” says Rice.

The majority of the large leases concluded have been with government tenants. The Department of Statistics renewed at De Bruin Park for 27,000m2 for two years, while the South African National Defence Force and Department of Correctional Services renewed their leases at Poyntons for 23,000m2 and 27,000m2 respectively. In addition, Isivuno House, which had been vacant for some time, attracted a new lease with the Department of Public Works for 15,000m2.

Rice says leases covering 644,002m2 expired during the year, while leases covering 683,754m2 were concluded, resulting in a decrease in vacancies of 39,752m2. “This, coupled with the disposal of some buildings with high vacancies, has reduced the vacancy levels in the portfolio from 10% on 1 July 2006 to 6% on 1 July 2007,” he says.

The office sector has the highest vacancy of 9,7%, while the retail portfolio has a vacancy of 5,8%, and the industrial sector has a vacancy of only 1,8%.

ApexHi is expecting leases on 505,000m2 to expire in the upcoming year. In addition, some 100,000m2 of space is currently being leased on a month to month basis while negotiations are underway. “Rentals on renewals are forecast to increase between 10% and 20%, which will boost the growth in net revenue from the existing portfolio,” he says.