https://www.engineeringnews.co.za
Africa|Building|Business|Business Growth|Components|Design|Industrial|Innovation|Logistics|Manufacturing|Safety|SECURITY|Solar|Storage|supply-chain|Sustainable|Systems|Technology|Manufacturing |Property Development|Solutions
Africa|Building|Business|Business Growth|Components|Design|Industrial|Innovation|Logistics|Manufacturing|Safety|SECURITY|Solar|Storage|supply-chain|Sustainable|Systems|Technology|Manufacturing |Property Development|Solutions
africa|building|business|business-growth|components|design|industrial|innovation|logistics|manufacturing|safety|security|solar|storage|supply chain|sustainable|systems|technology|manufacturing-industry-term|property-development|solutions

Industrial sector demand for space increasing, tenants want more value, says Redefine

24th March 2022

By: Schalk Burger

Creamer Media Senior Deputy Editor

     

Font size: - +

While supply bottlenecks caused by Covid-19 lockdowns are easing and opening the door for commercial sector property growth, the market for industrial properties looks very different, raising the stakes for operators to think outside of the box, says JSE-listed property development company Redefine Properties industrial national asset manager Johann Nell.

With the capital costs of relocating high, industrial companies, such as logistics companies, are looking for a better deal. Instead of just renting one box, they want a facility that includes add-ons and technology like racking and other supply chain components, as well as more climate-friendly and secure solutions.

“The industrial sector was resilient during Covid-19 and it is now the flavour of the month, backed by the rebounding growth in the retail sector. There is clearly a growing need for storage space as commercial companies look to keep more inventory.”

Some tenants also want a vested interest in the properties they rent. Nell explains that some have an interest in buying the warehousing facilities later in a lease, while others prefer a joint-ownership model.

Historically, a landlord would rent out a warehouse and leave the internal design and kitting out to the tenant.

“Logistics companies are increasingly looking to allocate their capital differently, rather than tying up large up-front amounts of working capital into racking, shelving and design. Demand for space in the 10 000 m2 space and above is heating up significantly, with limited stock leading to high levels of competition,” says Nell.

“There is a bit of a scramble for available space as supply chains open up after Covid-19-induced lockdowns. However, scarcity is also leading to more building activity and innovation,” he explains.

For Redefine, it has presented an opportunity to convert and retrofit existing facilities to meet the growing needs of logistics and other industrial clients.

An important fillip for the economy is that manufacturing activity is also showing signs of recovery. Growth in manufacturing bodes well for the economy as this is a key engine room for jobs and sustainable business growth, says Nell.

“There are new opportunities to provide more tailored solutions for manufacturers, especially after the July 2021 riots across KwaZulu-Natal and Gauteng,” he says.

Additionally, a major trend is e-commerce driving warehouse consolidation and supply chain expansion, which is increasing demand for new racked warehousing space. Another major trend is smart-tech systems enhancing tenant user experience, and Nell says all of these developments mean serviced land that can be developed remains in high demand.

Further, Covid-19 reflected notable changes in retail in South Africa, namely, with a shrinking brick-and-mortar market and accelerated store closures, the business-to-consumer e-commerce market grew by more than 60% from 2019 to 2020.

In addition, there was a nearly ten percentage points increase in online shopper penetration in the country from 2019 to 2020. Payments multinational Mastercard has also reported that online retail in South Africa more than doubled in just two years, thanks to the explosion in demand for home deliveries brought about by the Covid-19 pandemic, says Nell.

Meanwhile, improved sentiment in manufacturing is mirrored in recent statistics, with purchasing managers more optimistic about the coming months. A gauge tracking expected business conditions in six months’ time jumped to an almost four-year high of 71.3 points, more than ten points above last year’s average reading, according to media reports.

In the aftermath of the July 2021 riots and disruption in the KwaZulu-Natal logistics sector, Nell says there is a demand for short-term warehousing in Gauteng. However, not all companies have been able to relocate due to the costs involved.

“So what we are also seeing is increased demand for value offerings; that is not just a building but a greener building, with solar panels on the roof, and also for enhanced security. Demand for space in KwaZulu-Natal remains solid,” he adds.

Additionally, global trends also indicate exciting potential ahead. Amid record demand in the US, rent growth and investment activity, industrial real estate “will stay hot in 2022”. E-commerce’s expansion will fuel the need for more warehouse space, as will the growing economy, population migration and the desire for safety stock onshore, says Nell.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

Showroom

Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...

VISIT SHOWROOM 
Multotec
Multotec

Multotec, recognised industry leaders in metallurgy and process engineering help mining houses across the world process minerals more efficiently,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.088 0.144s - 152pq - 2rq
Subscribe Now