Neil Fraser
November 24, 2003
THIS was supposed to be the last of my year-end overview editions but it looks as though I am going to have to do one more. I told you the city was cooking!
Basically this Citichat looks at the area from Anderson Street northwards to Jeppe and between West and End, that's about 160 city-blocks, generally prime stuff. Next week we'll pick up the balance, Jeppe to Smit, and anything I might have missed elsewhere - if there is something I've left out anywhere that you know about, drop me a line.
But before detailing what is happening in the 160 blocks we're focusing on today, I've just done a very basic analysis of transfers of properties in the three townships that roughly make up this area; Marshalls Town, Johannesburg and City and Suburban. Unfortunately I haven't kept comparative figures for past years but I know they would have been low, low, low.
In City and Suburban there were eight transactions totalling R7.4 million; in Johannesburg 72 transactions totalling R426 million and in Marshalls Town 17 totalling R302 million - that's almost three quarters of a billion rand that has changed hands in the past year! AND those are only the properties reflected as transferred by the Deeds Office - there is also a huge backlog in the issuing of clearance certificates by the Council so I'm sure that the true figure must be way over a billion. Not bad for a city that was written off not that long ago! Not bad for a city where the phone calls I received for ten years were "do you know anyone who wants to buy or to whom I could give away my property?" Now it's, "where do you suggest I invest, what should I buy?"
The big buyers - ApexHi and Provincial Government; big sellers Sanlam and I see a number of the traditional financial institutions' names featuring regularly. OK, on with the show!
Fashion District
The Fashion District stretches from Von Wielligh in the west to End Street in the east and north to south between Jeppe and Commissioner Streets, it covers 34 city blocks. It is an outwardly gritty area of the city but is incredibly vibrant with plans to greatly increase not only the trading that is taking place within its borders but also the manufacturing component.
Two years ago we did an audit of about 20 of its city blocks, and at that stage there were 556 businesses in this smaller area of which 258 sold garment-related items and 63 manufactured, repaired or altered garment-related items. This equated to 321 fashion-related businesses - 80% being retail in nature and 20% manufacturing. This smaller area also contains numerous other activities which support the core business such as pre-schools, primary and high schools, trade unions, security companies, fast food outlets, small hotels, restaurants, shebeens and taverns, residential accommodation, clinics, furniture shops etc etc.
Informal trading appears to dominate the public space but much of it is actually from formal traders who have expanded their trading areas onto the pavement.
The first public space intervention took place earlier this year when a R1 million project physically demarcated the area. Three different zig-zag sowing patterns were cut out of all the footways throughout the district and filled in with mosaics providing a colourful and appropriate space branding.
Banners in the shape of garment patterns will also be erected to further emphasise the specialist nature of the area and, next year, supplementary urban management providing security and cleaning services, through a City Improvement District, will commence as well as a major thrust to develop and market the industry. As I said earlier, a gritty area but, in my opinion, one with enormous potential and I think a year from now we will see many exciting changes.
South of the Fashion District, on the opposite side of Commissioner Street, is the ABSA precinct. Following their massive investment of R450 million a couple of years ago a parking garage is currently under construction which will provide 830 parking bays for ABSA staff. This further investment reflects ABSA's ongoing commitment to the city.
To the west of the ABSA campus is the Carlton complex purchased by Transnet in 1999.
The Carlton
The Carlton complex comprises a 50-storey office building, Carlton Hotel and multi-level underground retail and parking. With the office tower now virtually filled - (just 30% occupied when it was purchased) - Transnet is turning its attention to the retail and hotel.
"The Carlton" was one of Africa's great hotels and has been one of the historic icons of the city going all the way back to the 1890s. The construction of the original hotel was delayed by war but eventually opened its doors in 1905. Demolished in 1963, it was superseded by a new Carlton Hotel that encapsulated the tradition of the former establishment. It was, in turn, closed down in the late 1990s before the complex was sold to Transnet.
During the past few months there have been two consortia developing serious proposals to re-open the hotel and the preferred partner should be announced by Transnet early in 2004. A substantial amount of money will need to be invested in relaunching the hotel, possibly as much as R100 million.
Directly to the north of the Carlton complex is the High Court which fronts onto Pritchard Street and which is the focus of another streetscape and public space upgrade project.
High Court Precinct
The upgrading of the streetscape around the High Court in Pritchard Street has been on the cards for some time. However positive movement has occurred in the last few months and I believe that this R15 million upgrade will definitely happen in 2004. The streets and footways adjacent to the High Court building will be re-laid, better lighting, banners and artworks are being planned and the area will be substantially greened. Likely to be funded one third by the public and the balance by the private sector.
Moving west of the Carlton Complex, down the two pedestrianised blocks of Fox Street, is Gandhi Square.
Gandhi Square
I've written about the redevelopment of the Square on a number of occasions, suffice it to say here that it remains a great success story with office occupancy moving from, on average, a low of 35% (a 65% vacancy) to probably 85% today - only a 15% vacancy and that mainly represented by the Trust Bank building on the eastern end of the Square which has of course lately been sold and will be refurbished next year.
Retail rentals have also improved dramatically during the past two years, in some cases doubling. The original visionary for the Square's redevelopment, Gerald Olitzki, now owns all the buildings on the southern edge of the Square plus the entire block on the north west end, that's putting your money where your mouth is!
Still moving west.
Legislature/Government Precinct
Some time ago I briefly wrote about the so-called 'secret' project of the Gauteng provincial government and the development of this government precinct has been confirmed on a number of occasions by the premier during the past week.
Central to the precinct is the City HalI, Harry Hofmeyer Parking Garage and the Beyers Naude Gardens purchased by the Gauteng Legislature for R20 million from the City. At the 'handing over' ceremony last week the Speaker of the Legislature, Firoz Cachalia, said that the building would be restored, upgraded and modernised "It is critical to preserve a sense of public domain ….by putting to rest discriminatory distinctions and investing in public spaces as opposed to shopping malls" he stated. This is really exciting as the Legislature plans to re-launch the City Hall proper - "I can see no reason why we should not once again be afforded the pleasure of listening to Mozart's flutes or enjoying the musical Shanti Town with Miriam Makeba". Great stuff, Mr Speaker, now let's implode Magid's Folly, the disastrous gardens and public space design foisted onto the city and build a park to the standard that SAPPI has provided adjacent to the Civic Theatre!
The creation of a Government precinct of course is far more than merely the upgrading of the City Hall building and contiguous public space. The Premier, in his end of year report earlier this week, referred to an investment of R300 million by the Provincial Government in pursuing the establishment of a Provincial Government Precinct, totalling 150 000 m² of office space.
The beautiful old SARB building corner Fox and Simmonds is already being refurbished for the Provincial Government Finance Department who plan to demolish that section of the building that backs onto Commissioner Street together with Clegg House. They will then erect a new building that will link into the historic SARB building. This of course will complete their ownership of the entire block bounded by Commissioner and Fox, Sauer and Simmonds, as they already own the ex Goldfields Head Office building that takes up the rest of the block.
An announcement from ApexHi Properties Limited this week reveals the location of some of the other buildings bought by Province. R154.4 million was paid for 30 Simmonds Street, 94 President Street, 78 Fox Street and 37 Sauer Street.
ApexHi CEO Gerald Leissner says: "the company is still a major investor in the CBD and is not actively looking to dispose of its CBD properties. The properties were sold to the government following an approach from them."
"The transaction is advantageous to ApexHi for a number of reasons. Firstly ApexHi has managed to dispose of these CBD buildings and show a profit on the sale, which demonstrates that the market is growing in the CBD, and our strategy to invest in selective CBD properties is paying off.
"Secondly, as a major investor in the CBD, ApexHi welcomes the acquisition of buildings by government - which we assume will form part of the Government Precinct recently announced by the Premier - as it demonstrates a commitment to remain in the CBD. This is good news for the CBD, and for major landlords in the area."
There clearly are a number of other buildings that make up the precinct and a definite pattern is emerging.
Main Street
An exciting project south of the government precinct but one in regard to which no details have been made public as yet, is the upgrading of Main Street from where Anglo American earlier pedestrianised the portion between West and MacLaren all the way up to Rissik Street. Project cost to the order of R12 million and largely private sector funded. Watch this space!
What kind of companies are taking up space in the inner city?
I'm always being asked that question, Well, here's one! Julia Kerr of Magna Carta, the PR and Communications Company, tells me that Andisa Capital is taking up space in Marshall Street.
Andisa Capital is the empowerment focused financial services company created by a consortium led by Nduna Trust and Safika Holdings and incorporates Simeka, as well as a broad-based trust which has been created for the benefit of a range of organisations representing disabled people, a scholarship fund, women and communities from historically disadvantaged backgrounds. In line with the agreement, the consortium owns 51% of Andisa Capital and the Standard Bank Group owns 49%.
Nail Chief Executive Saki Macozoma is non-executive Chairman of Andisa Capital and Ronnie Ntuli is the CEO.
The black-owned and -controlled business was officially launched on Friday, 1 August 2003 and is Standard Bank's empowerment partner of choice in relevant areas of investment banking. Standard Bank provides Andisa Capital with information technology, human resources, risk management and financial management support (including management development programmes) on an arms' length basis. Andisa Capital in turn provides Standard Bank's private bank and SCMB treasury with stock broking execution services. Welcome to the City!
Whoops, almost left out CIDA!
One of the truly great and inspiring success stories that has emerged from the city during the past four years is the CIDA City Campus. CIDA (Community and Individual Development Association) had its beginnings in the townships in the mid-nineties when the current directors ran projects in township schools to upgrade the level of education.
They followed a belief that inside every student is a potential which, when unlocked, contributes to the full development of the person and thus to the social and economic development of the community and ultimately of the country. They took the rural saying "It takes a village to raise a child" and inverted it to create one of their slogans; "It takes a child to raise a village".
Taddy Blecher, CIDA's visionary CEO established a think tank with international management consulting firm Monitor Company to conceptualise a workable higher education model which would encourage human, economic and social development at very low cost. The outcome was CIDA City Campus.
The first CIDA Campus was established at 54 Commissioner Street in the previous head office building of Investec who provided the building for CIDA's use. Since then CIDA has acquired, through donations, 37 Harrison Street from FNB, 9 West Street from Anglo and 50 Marshall Street. Refurb work is currently underway on 37 Harrison and 9 West Streets but is still to be commenced on the Marshall Street ex French Bank building.
37 Harrison Street will be used as a second campus. The building is where Nelson Mandela worked at a law firm from 1942 to 1945, and Madiba has given permission to name the building after him. The 11-storey, 12 000m² building will be used to accommodate 3000 students in the coming years. FNB has provided R8 million for the renovation of this building.
CIDA takes their presence in the city seriously which is well illustrated by their partnership with the City Council to develop skills in the city as part of their contribution to the City's long-term skills development programme. The partnership began earlier this year with 500 city centre hawkers being trained in financial literacy and entrepreneurship.
The training takes place in multiple languages including English, Sotho, Zulu, Xhosa, Shangaan and Tsonga. The hawkers are from markets in the city. A key aspect of the Joburg 2030 vision is developing the skills base in the city to ensure a labour force that can support the vision of Johannesburg as a world class African city. CIDA are clearly dedicated to assisting the city achieve this vision. More about this great initiative in a future issue of Citichat.
Bank City
Through one of the largest demolitions in the city for some time, First Card House is GONE! In its place a new parking garage is under construction which will provide parking for 1 012 cars at a cost of R34.7 million.
Eloff Street…
Being looked at for a major streetscaping upgrade.
…and more
Zenprop have purchased the block between Marshall, Anderson, Sauer and Simmonds and are refurbishing offices on one half and building a 7-storey parking garage on the other.
A private investor has purchased 77 Harrison Street and is going to redevelop as a mixed use, commercial and residential, complex.
Sanlam have sold their flagships: Sanlam Centre; Kine Centre (to be re-developed as an inner city clinic); and Trust Bank Centre to three separate investors.
The beautiful Corner House Building on Commissioner Street, is being refurbished as upper income apartments and lofts and the new owners are also looking at purchasing other buildings suitable for such a conversion, the Stuttafords Building has been mentioned in this regard.
Scorecard
It's actually quite difficult keeping a scorecard but, excluding any Carlton Hotel investment still to come, I reckon that investment in property in this area has been in excess of a billion rand over the past year, 70% being private sector, whilst construction activity underway or about to start is around the R100 million mark, almost all being private sector.
