Down and out in inner Johannesburg? Not so fast
The likes of Old Mutual and Hollard have quietly taken space at less than half the rental cost of Sandton
Attorney Gerald Olitzki, who is well known for buying and developing buildings in Johannesburg's inner city, says the perception that there has been no sizeable investment there in the past two decades is inaccurate.
Recently Divercity Urban Property Fund was launched with R2bn of inner city assets. The group committed to investing a further R2bn over the next 18 months to redevelop Absa Towers Main and create the new mixed-use six-city-block, Jewel. Some commentators have said this would be the largest one-off investment in the inner city in decades, but Olitzki says many people have been putting money behind projects in Johannesburg since the turn of the millennium.
Is Johannesburg’s inner city in dire straits?
Johannesburg is very large and the inner city has many faces. There are parts which need attention and investment but there are also parts which are being managed very well and are of a world-class standard.
How long have you worked in Johannesburg and why don’t more companies have offices there?
I started my legal articles in 1973 in an inner city building; 45 years later my company has redeveloped and now owns that building. So I’ve never actually left the inner city. I still work as an attorney in my own legal practice and run a property development and management business.
When many businesses deserted the inner city it led to worse decay as they created a vacuum. The inner city was thriving up to the mid 1980s and then corporations decentralised. Many locked up their buildings and left. The vacuum brought in a criminal element and people were left jobless and homeless.
So myself and numerous other investors and developers and people who care for the inner city have spent more than two decades fixing up old buildings, creating new ones and making the inner city something to be proud of. We have focused on redeveloping buildings into thriving offices.
To say that recent investments by some private or listed groups will bring corporates back isn’t really of value. Corporates are already here. The likes of Old Mutual and Hollard have taken space in many of our office buildings. They know that getting R85/m² for CBD offices and access to the broader public is attractive. So you have banks opening offices and branches here that serve people who work in and walk along the streets every day. Yes there are big businesses and banks in Sandton but these groups tend to serve a different clientele and these groups are paying rent upwards of R200/m². What is the most important inner city project that you have worked on and why?
Ghandi Square is the heart of the inner city and I started there. In 1993 I approached the city council about reviving what was then called Van der Bijl Square and was turned down. I then spent from 1994 to 1999 trying to persuade the council to give me a lease. I eventually got a 45-year lease over the square, with the help of Graeme Reid of the JDA [Johannesburg Development Agency] and Neil Fraser of the Central Johannesburg Partnership. The square was renamed Ghandi Square. It also became party the first City Improvement District [CID] in Gauteng. It is now a thriving square visited by in excess of 250,000 people per day. It has also helped bring business to the streets around it. The busiest McDonald’s is here. We have many successful retailers here too. There are positive stories about people who had struggled in the inner city and are now running successful businesses. Why don’t you develop residential property? Surely there is a shortage of housing in the inner city?
Numerous companies have developed high quality, affordable and sometimes upper market apartments and other residential assets. These are the people behind the likes of City Properties, Afhco [Africa Housing Company] and others. We don’t do residential as others have the skills to do it.
As much as 90% of inner city property is in white hands. How can black people get into this market?
We do a lot of business with black business people who want to invest in the city. We have structures in place in our leases which help them get into the market. We have also sold numerous buildings to black empowered property funds including Rebosis, Ascension and Delta.
What’s next for Gerald Olitzki?
I will launch a new redevelopment project in a part of the inner city in the next few months. I’m very excited about it and confident it will make life easier for people working and travelling through this specific area.