Western Cape Business News

Send  Share  RSS  Twitter  19 Oct 2010

PROPERTY: Increased Interest In Industrial Space


Recent Western Cape Business News

There’s been a noticeable increase in enquiries for industrial space in the Cape Town area of the Western Cape, reports Marius Basson, regional director for JHI property services group. This demand is from both light industrial users seeking space up to around 600sqm, as well as larger users seeking space over 3000sqm.

Since the start of the second half of 2010 the industrial property sector has experienced an upturn in enquiries for industrial space – a factor which is usually one of the first indicators of economic recovery. In the Northern Suburbs we’re seeing a growing demand mainly in the size range from 3 000-10 000sqm, particularly for warehousing /distribution facilities mainly catering for the FMCG (fast moving consumer goods) market. Generally there is more confidence in the market, while the standard of enquiries has escalated in quality and quantity. Some businesses – including blue chip companies, have indicated they are planning future expansion.

Evidence of this is that a major national food retailer is currently building to expand their facility in this region to almost double their current accommodation. In addition, JHI leasing and sales broker Johan Kirchner recently concluded a transaction for a five year lease of 12 880sqm of industrial space in Tygerberg Business Park on behalf of the Fuel Logistics group. Further to this we’re also seeing a demand from upcountry businesses for sizeable manufacturing plants which may require a heavy electricity supply – another positive indicator for the Western Cape. Also in the Northern Suburbs area large warehousing with a large yard facility seems to be a popular request while recently we are also receiving enquiries for cold storage facilities.”

In Paarden Eiland, within easy reach of Cape Town harbour and the central city, JHI leasing and sales broker Seamus Daly recently concluded the sale of a prime located, 3000 square metre commercial property to the Johannesburg-based Union Tiles to launch their Cape Town store. Other transactions recently concluded by the property services group include a lease of 1 800sqm - also in Paarden Eiland, and leases of 3 000sqm and 600sqm in Montagu Gardens – a well-positioned, high-profile light industrial area.

Basson says areas in demand among industrial users – particularly those seeking to rent - include the well established area of Epping, situated between the N2 and N1 with close proximity to the city of Cape Town and the port, as well as easy access to all major routes and Cape Town International Airport. Currently quality industrial buildings are available for purchase here ranging from 3 000-8 000sqm in size and priced from R3 500 a square metre – a good price for this area.

Says Basson: “The improvements to road infrastructure have also boosted interest in industrial space, while areas close to well-established business nodes are also very attractive to industrial users. In Lansdowne Road in Sheffield Business Park - near the M7 and with easy access to the harbour and airport, only a few sites remain available with a major national retailer having taken approximately 14ha of space for a distribution centre, while a 9 000sqm site has been purchased by a leading manufacturer of hot water cylinders. In this business park currently only two sites of 3000 and 7000sqm remain available for purchase at the competitive rate of R1000 per square metre.”

In ‘The Stables’, located in Killarney Gardens off the N7, 70 000sqm of space has been taken up for a bus depot. This industrial park offers good access for staff living in nearby areas, and here land is available for purchase at R1 250 per square metre, as well as a 2 500sqm building priced at R13.125 million. For those wishing to lease space light industrial accommodation ranging from 100-3000sqm in size is available at R30-R35 per square metre.

In the Northern Suburbs of Cape Town the current rate for industrial space to rent ranges from R20 per square metre in the older areas up to R45 per square metre in newer developments, with lease terms being concluded on either a three or five year term.

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