Real Estate Investor Magazine South Africa March 2015 | Page 48

industrial

Evolution

of industrial properties

Economic challenges means
more efficiency
BY ENGELBERT BINEDELL

S

mart operating spaces with smaller floor areas,
but larger volume, will define the industrial
property market in South Africa in 2015.
This will be driven by the consolidation of operations
as industrial businesses remain under pressure, the
immense impact of the Eskom electricity crisis on
the industrial sector and continuing increasing energy
prices, as well as supply dynamics of industrial space in
certain areas.
“The failure of major retailer Ellerines has not only
resulted in the failure of retail tenancies at shopping
centres, but also the failure of tenancies at distribution
centres, yet, while sentiment remains quite negative
when it comes to economy, manufacturing output data
is showing movement towards positive territory, which
is good news for industrial property,” says Engelbert
Binedell, Growthpoint Industrial Property Divisional
Director.
Industries are working differently and innovating
to adapt to the present set of challenges. “Industrial
concerns are operating smarter to ensure their
sustainability. This is also resulting in their property
needs evolving and a new set of desirable specifications
to match,” he adds.
Industrial companies change their behaviours to
create new ways of streamlining their businesses, like
working at off-peak times to benefit from off-peak
tariff savings. Industrial businesses are consolidating
their operations onto single sites, and seeking buildings
with smaller footprints but greater volume from
increased height.
Established industrial nodes in Durban include
Prospecton, Jacobs and Mobeni in the South,
Springfield, Riverhorse and Briardene in the central
areas and Westmead, Pinetown and New Germany in
the west.
Some of the key drivers of demand are facilities
with sufficient power, yard space and adequate internal
stacking height.

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March 2015 SA Real Estate Investor

“Asking rentals within these established nodes are
proving far more attractive than what new ‘greenfield’
developments can offer as a result of land costs which
are driving up asking rentals,” reports Binedell.
However, the N3 Western Corridor, which includes
Hammersdale and Cato Ridge, is an exception.
Striving for improved efficiencies and cost savings,
national retailers such as Mr Price, Massmart, Bata
and Pick ‘n Pay are consolidating their different
distribution centres into major distribution hubs. Here
too the emphasis is on smaller floor area but larger
volume. The desirable specifications include features
such as 20m ceilings, super-flat laser screed floors,
high-tech racking with in-rack sprinklers and generous
hardstand yards. “In KwaZulu-Natal, there is a distinct
undersupply, and genuine demand, for these types of
logistics facilities,” Binedell points out.

“Manufacturing output data is showing
movement towards positive territory,
which is good news for industrial property.”
When it comes to the undersupply of logistic space
in Durban, the government has progressed significantly
in addressing congestion within the port. While the
strategic plan for this area is a 10-year project, it is
important to know where infrastructure spend is going
to take place and where the priorities lie.
Meanwhile, in the Western Cape, “Investors and
users are starting to move beyond the traditional
industrial nodes because of the availability of land, less
traffic congestion, improved road infrastructure, more
palatable rentals and the ability to deliver specially
tailored premises,” notes Binedell.

RESOURCES
Growthpoint Properties
www.reimag.co.za