Changes in the Industrial Property Market Cape Town

Galetti Knight Frank December 10, 2014

 

 

 

 

According to a local, annually conducted survey, in the past twelve months the change in the industrial property market in the greater Cape Town area has been very little.  The market has remained tenant driven with a small improvement in rentals. The standard gross rental for available space has slightly increased from R30.00/m where it has been languishing since 2009 to R32.00/m.  The current figures in the greater Cape Town area reflect a general vacancy of 611,500 m, of which 69% is in industrial structures over 1,000 m (or 418,000 m) in size.

The development of new structures for the larger users, though limited, has being driven by idleness of the existing space and unavailability of modern A Grade facilities. With the main players of the industrial market in Cape Town being mainly the retailers and third party logistics – they require high volume distribution centres that have higher loading and wide yard areas in order to accommodate huge commercial vehicles. But the average of new development gross rentals is R60.00/m plus, twice the already existing property rentals.

It is also important to note that new developments that are tenant driven continues in Airport City, at the Sheffield Park which borders the N7 and Lansdowne Road and Brackengate situated off the R300; and Improvon have been doing well developing a large warehousing on risk at Montague Industrial Park which borders Koeberg Roads and Plattekloof.

During the survey period, there was no evidence of manufacturing take up – even possibly some shrinkage. Despite this, there is interest from developers who want to take spaces in the older central industrial areas, like Parow, Epping and Bellville, where the cost is reasonable for older properties which can be held until they become viable to rebuild the site for larger tenants.

The survey also showed that yearly escalations remain 7,5% to 9% even though the latter only for a shorter term lease. Longer term leases have attracted more favourable escalations. The average land values have had a marginal increase to about R1,050/m Excluding the VAT. Areas that are more popular include Sheffield Park, Airport City and Brackengate. Also there has been renewed interest in the Southern Suburbs at Capricorn Park. Even though there are vacancies in the market, there are few industrial structures for sale. Buildings which are reasonably priced tend to be bought quickly.

Galetti Knight Frank

Marketing Manager at Galetti Knight Frank

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