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OFFICE MARKET REPORT Umhlanga & La Lucia, KwaZulu-Natal June 2018
Umhlanga & La Lucia Office Market Report
June 2018
BROLL INSIGHT HIGHLIGHTS
Accessibility Trends
The combined Umhlanga and La Lucia node is accessible from the • Until recently most development has been tenant-driven,
N2 highway via the M41, with La Lucia south and Umhlanga north of resulting in an equilibrium in supply and demand. However, this
the M41. Whilst traffic remains an issue in some areas, congestion trend appears to be shifting and another cyclical oversupply of
is lessening as sections of the major N2 intersection upgrade have offices may be imminent. As building and land prices increase,
recently been completed. Additional access will be in the form of as do the value of sea views, rentals are managing to peak at
the Cornubia link bridge and interchange which are well underway. around R200/m²/month in certain instances.
• Until recently Ridgeside was purely commercial in nature, however
Aesthetic Appeal multiple residential developments have since commenced and
Approximately 87.9% of total stock is A-grade with many buildings will house internationally-branded hotels, adding to the prestige
having sea views and attractively landscaped gardens. Building and convenience of the node as well as embodying the ‘live,
height restrictions are notably more generous in the Ridgeside work, play’ concept.
district with high quality, Premium grade designs becoming evident • Retail amenities are in abundant supply with multiple offerings
in newer developments such as Pran Boulevard (KPMG Durban HQ), found in the node. Additionally, the R4billion mixed-use Oceans
Nedbank’s Park Square and the new Umhlanga Arch. Mall development is expected to be completed in the latter part
of 2019.
Affordability
• The combined Umhlanga/La Lucia node has set the trend for the
P-grade: R170 – R200/m²/month gross achieved
Greater Durban area in pioneering urban management initiatives
A-grade: R155 – R160/m²/month gross achieved (UIPs and RMA) as partnerships between the private sector and
the City.
Amenities
Amenities include retail and medical facilities, banks as well as Take-up
hotels. The Umhlanga New Town Centre, in particular, hosts a
• The node has experienced increased levels of market activity for
large hospitality sector. The area known as Umhlanga Village
both sales and leasing.
(between the M4 and the beachfront, around Chartwell Drive) is
• Certain older buildings are being refurbished to ensure
the premier restaurant and bar district with the beachfront and
attractiveness to potential new tenants.
promenade being major additional attractions to tourists and locals
alike. Gateway Theatre of Shopping (a popular retail destination) • Call centres continue to be some of the largest occupiers of
is undergoing a refurbishment and 20,000m² expansion, while space, particularly in Umhlanga New Town Centre, contributing
Cornubia Mall opened its doors at the end of 2017. to the increased development activity. A number of call centre
businesses are moving to Mount Edgecombe attracted by lower
rentals and building availability.
Area’s Security
The node is well established and secure. Most landlords have
Tenants
enlisted private security companies, with the Umhlanga Urban
Improvement Precincts (UIPs) and Ridge Management Association • The node has become home to a large number of blue-chip
(RMA) providing additional sub-contracted private security tenants such as Aspen Pharmaceuticals, KPMG, ABSA, EY, Deloitte,
throughout the node. Many buildings are located within secure Vodacom, AECOM etc.
office parks with boom gate access, 24 hour security guards and • The Umhlanga New Town Centre area, adjoining the Gateway
electric fences. Theatre of Shopping, tends to be popular with call centre-type
businesses and educational facilities.
Availability of Space • Umhlanga is fast taking on the appearance of a new CBD and
Vacancies in the region average between 2.0% and 9.5%, depending houses a wide range of businesses, from those operating from
on building type and/or location, with the node overall recording an shared workspaces to head offices or regional head office
average vacancy rate of 5.0%. facilities.
1
Umhlanga & La Lucia Office Market Report
June 2018
MARKET OVERVIEW Milkwood
The combined Umhlanga and La Lucia office node is well-located Umhlanga Ridgeside, which has seen substantial recent
with easy access to national roads and major arterials. The node is a developments, is regarded as the more prestigious office location
short drive into Durban central and less than 15 minutes from King where buildings have scenic sea views. Corporates such as Absa
Shaka International Airport - which will offer direct international Bank, KPMG, Investec, Vodacom, AECOM, FNB and Illovo Sugar are
flights into London at the end of October 2018 - and the Dube situated within the area. Additionally, even though Ridgeside is
Trade Port Cargo Terminal. predominantly made up of commercial uses, a number of residential
developments have been launched and are under construction.
Sections of the major N2 highway intersection upgrade have
recently been completed and have played a large role in easing The Umhlanga New Town Centre area adjoins Gateway Theatre
traffic congestion within the node. Additional access will be in of Shopping and is mixed-use in nature, comprising offices, retail,
the form of the Cornubia link bridge and interchange which are hospitality, healthcare and residential uses.
well underway and will provide direct access from Cornubia into
Umhlanga New Town Centre, with Umhlanga Ridge Boulevard being The success of the combined Umhlanga and La Lucia node continues
extended over the N2 highway. This will also form part of the City to attract blue-chip tenants including national and international
of Durban’s Integrated Rapid Public Transport Network, GO! Durban, companies, banking and insurance companies as well as many
which will further enhance accessibility within the region. While prestigious local and international professional services businesses.
there has been some talk of a rail linkage this, if it is planned, would The relocation of King Shaka International Airport to La Mercy has
not happen in the foreseeable future. seen many corporates, particularly global companies seeking offices
within this node owing to its location and easy access to and from
The Umhlanga and La Lucia node may be regarded as one the airport.
geographically continuous area often referred to as simply
Umhlanga. However, it can be divided into three main areas, namely: Mount Edgecombe and the newer Cornubia areas north of the N2
the La Lucia Office Parks located south of the M41 (which divides contain a number of existing offices and new office development
La Lucia from Umhlanga), the area north of the M41 referred to opportunities. The extent to which the area starts to compete with
as Umhlanga Ridgeside and the third distinct area surrounding the the Umhlanga/La Lucia node over time remains to be seen.
Umhlanga New Town Centre.
While the Umhlanga New Town Centre enjoys access to a larger Grade Overview
variety of amenities owing to its mixed-use characteristics, retail
Prime Grade A-Grade B-Grade
and medical amenities are located in close proximity to all three
areas. Furthermore, a number of new hotels are found in the Space in demand
200 – 1,000 100 – 2,000 400 – 8,000
Umhlanga New Town Centre area as well as in Ridgeside and in (m²)
Umhlanga Village in more recent times. Lease escalation 7.5% 7.5% 7.5%
The La Lucia Office Parks area is well established, secure and very Lease operating cost
7.5% 7.5% 7.5%
popular with businesses looking for, generally smaller, A- and B-grade escalation
offices in “park-like” environs that lack the access to amenities of Gross asking rentals
200 150 – 170 135
the New Town Centre precinct. Some of the older buildings in this (R/m²/month)
area have either been refurbished to A-grade or are in the process of Gross achieved rentals
170 – 200 155 – 160 135
being refurbished. Those buildings that have not been upgraded are (R/m²/month)
becoming B-grade as a result of their age. Blue-chip tenants in some Length of lease (years) 3–5 3–5 3–5
of these buildings include Aspen Pharmaceuticals, EY and Deloitte.
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Umhlanga & La Lucia Office Market Report
June 2018
CONSTRUCTION ACTIVITY
An increased number of P-grade offices have recently come onto create numerous quality opportunities for blue chip tenants for
the market and many new additional office developments are the foreseeable future. However, the impact of current economic
scheduled to be launched in the next 12 – 24 months. This new conditions on the take-up of space as well as the possible resistance
space, measuring approximately 100,000m², is expected to to higher rentals remains to be seen.
CONCLUDING REMARKS
The La Lucia Office Parks area has reached maturity and has It is also expected to drive property sales and leasing transactions
been stable over recent years without significant movement or while simultaneously transforming the landscape of KwaZulu-
development. By contrast, the enormous amount of development Natal’s coastline. The addition of direct international flights
across all categories (office, retail, residential and hotel), in both into London further strengthens Durban and its northern areas
Umhlanga Ridgeside and New Town Centre as well as neighbouring prominence as a growth area and investment destination. New and
Cornubia and the Sibaya Precinct to the north, is expected to create exciting opportunities for tenants and landlords alike are expected
opportunities in the form of jobs and economic stimulation. to become evident.
UMHLANGA/LA LUCIA, KWAZULU-NATAL LISTINGS
Click the building name or image to view the listing online.
19 CREWKERNE RIDGE 7 MILKWOOD
Gross Asking Rent Gross Asking Rent Gross Asking Rent
R 154 R 180 R 180
(R/m2/month) (R/m2/month) (R/m2/month)
Sizes of units Sizes of units Sizes of units
665 200 - 1,000 580
available (m2) available (m2) available (m2)
Lease Period Lease Period Lease Period
36 - 60 36 - 60 60
(months) (months) (months)
Availability Immediately Availability July 2019 Availability Immediately
Click here for further listings in Umhlanga/La Lucia
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Divisional Director - Broking
Frank Reardon
+27 31 362 1721
+27 83 284 9119
freardon@broll.com
Area Specialist
Mitch Cowie
+27 31 362 1700
+27 82 566 5600
mcowie@broll.com
Divisional Director - Research Disclaimer
Elaine Wilson Broll Property Group has taken every care in the preparation of this report. The sources of
information used are believed to be accurate and reliable, but no guarantee of accuracy
+27 11 441 4083 or completeness can be given. Neither Broll Property Group, nor any CBRE company, nor any
ewilson@broll.com director, representative or employee of Broll Property Group, accepts liability for any direct or
consequential loss arising from the use of this document or its content. The information and
opinions contained in this report are subject to change without notice. No part or parts of this
report may be stored in a retrieval system or reproduced or transmitted in any form or by any
means, electronic, mechanical, reprographic, recording or otherwise, now known or to be devised,
without prior consent from Broll Property Group. All stock and vacancy figures have been derived
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