Office Leases – Provinces – Infographic

In 2016/17, Provincial Governments collectively leased 1.2 million m2 of office accommodation at an average cost of R 120 /m2 per month — at a total cost of R151 million month/R1.8 billion per year. Most of lease expenditure (85%) were in the major economic centres of the provinces, where average costs are R125/m2 for leases of offices that averaged 5,400m2 in size. Elsewhere, leases tend to be considerably smaller. Departments in Government’s social cluster accounts for more than 50% of the leased space. These leases tend to be larger offices- over 2,000m2 – and primarily in CBDs & Main Centres, at an average rental of R126/m2. Leases for departments in the Economic and Governance clusters are for between 1,500 – 1,600m2 at an average R120/m2. Just over 20% of the total rental expenditure is on leases that have expired and are running on a month-to-month.Based on market benchmarks, it is estimated that about a third of monthly expenditure is on leases the cost of which is above market norms. Most of the expenditure above market is in the CBD and Main Centres, and just under 90% of the expenditure above market was in 6 provinces. Just under 80% of these lease in the CBD & Main Centre that are above market. A lease maturity analysis was not conclusive in providing a correlation of mature leases and rentals above market.Potential savings were estimated to be in the range of R600 million to R1.2 billion over three years.