Real Estate Investor Magazine July/ Aug 2020 July 2020 | Page 41

industrial areas such as Midrand and Pomona in Gauteng,
Riverhorse Valley in Kwa-Zulu Natal and Bellville South,
West Coast and Central Nodes such as Airport Industria and
Epping in the Western Cape.
“These areas are on the rise, and we predict a significant
increase in industrial real estate development once
stakeholders realise their profitability,” he says.
Advice to Landlords
Marais says that landlords looking to ‘cash-in’ on this
sector must consider various important and unique factors
associated with owning and leasing out an industrial
property.
1Compliance is Key
“A building must be fully compliant with the Operational
Health & Safety (OHS) Act. It should be a fully functional
space that meets all the standards, is correctly wired, with
ceilings in, sufficient ventilation, the floor in and so on -
essentially fully finished,”
“Following these steps will make the space more
attractive to prospective tenants who are looking to pivot
their business models and meet the fast-changing demands
of the ‘new normal’”.
2A ‘Lock-Up-and-Go’ Space is Most Attractive
Marais adds that the warehouse component of the
building should be as accessible and secure as possible
to meet the logistical requirements of manufacturers and
distributors. “A lock-up-and-go (or ready to go) space also
increases the possibility of reducing cashflow pressure
through sub-letting - a trend quite popular in the industrial
real estate market,” he explains.
3Consider Flexible Lease Terms
Marais urges landlords is to consider the longterm
benefits of flexible lease terms. “We are seeing an
improvement in tenant incentives, as some are being
offered up to four months rent-free at the beginning of
the lease. The wide-spread adoption of more flexible lease
terms in the industrial real estate sector will definitely come
at a premium to existing market rentals, but will give the
tenant the flexibility to reduce their footprint at short notice.
However, he cautions that there is no ‘one-size-fits-all’
approach for COVID-19-era regulations and that many
landlords are sticking to their guns to retain a properties
initial rental value. “As the market’s response to COVID-19
evolves, we’re seeing that the initial willingness to drastically
reduce rentals is not a clear representation of the whole
market” Marais concludes.
SOURCE Galetti Corporate Real Estate Western Cape
Clint Marais
Clint Marais finds the
connectedness of the
various real estate
industries, as well as the
different people that make
up the industry fascinating.
He is currently the Regional
Head of Galetti Corporate
Real Estate Western Cape.
Galetti is one of South
Africa’s leading Commercial
Real Estate consultancies.
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