Low vacancy rates for logistics properties continues to drive demand across South Africa
Market rentals within South Africa’s industrial property sector are growing nationally, as demand for well-located warehousing keeps the vacancy rate across the country’s three largest metros almost at zero.
This makes industrial properties such as warehousing a hotly-traded commodity at auctions across the country, said Broll Auctions and Sales CEO, Norman Raad.
According to the JLL.Africa’s quarter one South Africa CRE Market Snapshot, economic performance has posed challenges for the commercial real estate sector, however the industrial sector continues to see above-inflationary rental growth supported by the positive supply-demand dynamics, and strong retail demand.
The report puts the national vacancy rate for logistics properties of more than 20 000m² at 0.5%. “This drives the demand for suitable warehousing, especially of a certain size, making the right property a good investment potential,” Raad said.
Bakkies Reyneke, Commercial Broker at Broll Auctions and Sales, said warehousing with height, roller shutter doors and large yards with space for trucks to turn were the most in-demand.
“Proximity to major highways and airports or ports also adds an element of desirability as does good security.
Safety considerations impact the attractiveness of a property to potential tenants, so being located in a built-up, well-trafficked area, with high walls and an alarm are factors which buyers look at.”
While many cities have added modernised warehousing clusters in recent decades, Reyneke said older properties usually boasted bigger yards and better access to power.
“People are looking for value for money, so in Johannesburg we are seeing a lot of business migration from Linbro Park for example where space costs R70 per square metre, back to traditional industrial areas like Alrode and Wadeville where you can pick up a warehouse at half the price.
Redevelopment is happening as modern businesses require less office space, so old offices are being knocked down to create bigger yards or used for additional storage,” Reyneke said.
This can be seen by recent Broll Auctions and Sales’ deals including a 3 000m² industrial warehouse in Alrode, and an industrial facility in the thriving industrial area of Robertsham, the latter which has roller shutter doors well located for easy loading and offloading, well-maintained offices and excellent height which made it suitable for a variety of industrial operations.
Other successful sales were a Marshalltown industrial facility with similar features and excellent street access, and a prime logistics hub in Queenstown, in the Eastern Cape.
“People want space – there is a higher influx of trucks and no on-street loading is done anymore as a safety precaution, so the bigger the yard, the more attractive the property.”
When it comes to sustainability, Broll Auctions and Sales finds that it is only large listed or international companies which are committed to green buildings. “For most, if there is a generator and it is cheaper than solar, a mid-sized business is happy to use that as they are not doing ESG reporting. Back-up water is a nice-to-have, unless operations are water intensive,” Reyneke said.
Broll Auctions and Sales will take several quality industrial properties to auction on August 22, with hot bidding expected on an 6 560m² prime industrial and retail property with highway exposure in Eastgate, Sandton.
“This property offers warehouse space with ample height, retail, office and yard space making it extremely attractive.
A leaseback on the retail portion of this asset is another drawcard for investors seeking an immediate return on their purchase,” Raad said.
“An industrial block in Alberton with seven well-maintained buildings with triple net headleases is ideal for investors looking for a strong yield.” The property is ideally situated in Alberton’s light industrial node, with excellent connectivity via the N17 and N3 highways, providing easy access to Johannesburg and other regions.
“Its prime location, comprehensive infrastructure and accessibility make it perfect for efficient distribution and seamless industrial operations.”
Other industrial properties on auction include a fully-let 3 000m² mini industrial park in Bloemfontein’s industrial hub of Hamilton, a truck yard and fuel depot in Belfast, Mpumalanga strategically positioned along the N4 highway, and a multi-use industrial facility in Denver, Johannesburg, ideal for storage or distribution.
The auction will be held at Wanderers Club in Illovo, Johannesburg on August 22 from noon or live on brollauctions.com
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