Article on Melville by Chris Hajec . 17/09/2014
The rumours of my death have been greatly exaggerated! Commercial property in Melville on the rise…….
As a commercial real estate broker active in the Melville area one is often confronted with a myriad of questions concerning the viability of the Melville commercial property market by potential investors:
“Isn’t Melville on the decline?”
“Will I be able to fill my space with potential tenants?”
“Aren’t there a lot of vacancies in the area?”
Or my favourite commentary:
“Melville isn’t what it used to be!”
The truth is, no, Melville is not what it used to be in the days of 7de Laan. Neither is the rest of South Africa! Yes, Melville has experienced some hard knocks stemming from the real estate downturn 7 years ago and Main Road is still struggling to get back on their feet……but a surge of investment has occurred recently by investors keen to take advantage of the disproportionate rate of appreciation and return they can be afforded in an area which has proven its resilience in the face of economic challenges. If you haven’t been there in a while, take a walk down 7th Street or 4th Avenue any night of the week (if you can find parking!!!) and you will get the picture. The area is thronged with residents, students, tourists and visitors from surrounding suburbs visiting the trendy eateries or the bohemian night haunts. While 7th Street used to be characterized by “To Let” boards….it is now rare to find a vacancy available if you would like to situate your business among this bustling traffic. And if you think that is exciting…wait until the new mixed use container development (a la Newtown) comes online on 4th Avenue!
From recent sales of small retail and residential blocks to the iconic (to Melvillites) SPAR shopping Centre for R34 Million in June, business has been brisk and has shown that although still cautious and looking for a bargain, investors are convinced that Melville is a safe bet to place their hopes for future returns. The difference between those places moving quickly and those remaining on the market has a lot to do with tenant composition and return on investment (ROI). Investors are demanding at least a 12-13% cap rate and are weary of properties where poor management has led to problem tenants or long term vacancies.
To what can we attribute this rebound when many people were ready to read Melville its last rights? Well, you could cite the proximity to UJ and Wits, its placement along the Reya Veya, or its convenient positioning to the SABC and downtown Joburg……and one would not be wrong; but as an insider in the real estate market I have been of a different opinion. Even during the economic downturn, even while shops were closing and urban blight was knocking on the door…… Melville’s strong residential community, heavily invested in and committed to the area….galvanized themselves to reverse the tide in the form of an extremely active home owner’s association. Say what you like about this outspoken group (and many developers who have butted heads with them might take you up on the opportunity) but this group’s dedication and belief in the uniqueness of their neighbourhood made them dig in and fight rather than sell up and move north of the ring road. And that consistency held the line until the reviving economy did the rest of the work.