By Wesley Cowan, Director of Galetti Corporate Real Estate
Against all odds, the commercial property sector has fought back and is showing positive signs of growth and recovery for 2022. The sector’s rebound is clearly illustrated in GrowthPoint’s latest financial results, with the company reporting an 8.5% decrease in group vacancies.
And while the sector continues to fight against uncontrollable odds such as inflation and interest rate hikes, we believe that the industry has weathered the worst of the storm in the short term.
Logistics, logistics, logistics
While high vacancies in the office sector cannot be denied, the logistics property sector is a firm frontrunner and has contributed to a large portion of the sector’s growth for 2022. Demand from the logistics property sector for warehousing and vacant land in industrial areas is leading the way.
Interestingly, there are few vacant industrial premises on offer – particularly in the Western Cape – giving rise to a seller’s market. The major uptake in space can be largely attributed to the growth of eCommerce.
Property developers have also noticed the uptick and are cashing in. While developers still welcome the opportunity to develop warehouses for a confirmed tenant, there has been a notable upsurge in the development of speculative warehouses, and developers are filling these successfully prior to completion.
Why Logistics and Why the Western Cape?
Rodes’ Report on the South African Property Market for Q3 2022 detailed a nominal rental growth of 5.3% for spaces of 500m2 (compared to Q3 2021). The report further states that the market was boosted by low vacancies and demand for logistics warehousing.
While there is significant growth and uptake across the country, the Western Cape province has outperformed the rest. With barely any industrial sites on offer, clients are clamouring for space. This creates a unique opportunity for investors and landlords.
In the office sector, various companies are relocating their head office to the Western Cape in a sustained semigration movement.
We believe that 2022 will forever be defined by some of the largest logistics property deals that the industry has experienced in recent history. In Gauteng, prominent brands such as Isuzu, Media24, and Crusader Logistics expanded and found new premises in 2022. In the Western Cape, Truworths, The Foschini Group, and Media24 Logistics were some of the frontrunners in securing new premises while in KwaZulu Natal, Zacpack led the way.
Deals concluded in this sector equate to north of 500 000m2 in 2022.
Operating in logistics and looking for your forever home? Get in touch with our team!
