Why Industrial Property Owners Should Consider Auctions?
Property sellers are continuously seeking innovative and efficient methods to sell their properties. A method that has gained significant traction is auction sales, especially in the industrial property sector.
The high demand for industrial-zoned land is a key driver in the industrial market and the reason for low vacancy and high rentals.
“There’s a substantial demand for industrial-zoned land, especially in the Western Cape and Durban,” says Wes Cowan, Director of Galetti Auctions.
This demand, coupled with the extremely low vacancy rates in Johannesburg, Western Cape, and Durban, creates a high demand-low supply scenario, making auction an ideal sales method.
“Why settle for the first price, when you can secure the highest price?” prompts Wesley.
“The opportunity to create value comes from buying an already developed property where we expect vacancy to remain low. For buyers, it is a good buy, and for sellers, it is a good sell because we achieve the highest prices that we are seeing in the market to date.” says Ricardo Silva, Director of Galetti Auction.
The industrial market is an attractive asset class for investors. “The longevity of tenants and increased rentals make the industrial market an exciting asset class for investors. Investors also prefer tenanted industrial properties over retail centers due to lower maintenance and management costs. Industrial facilities typically require minimal tenant improvements,” Da Silva explains.
Our auction campaigns for tenanted industrial properties have been receiving strong responses, especially for properties with existing tenants. Recent successful sales underscore the effectiveness of auctions, including the AVACARE portfolio, which sold above the expected price, as well as properties in Chloorkop, Jetpark, and numerous Fortress properties.
“ Fortress Real Estate Investments Limited chooses to use auctions as their preferred method to dispose of assets, reflecting the competitive nature of the market,” says Cowan.
Auctions provide a streamlined sales process, ensuring prompt transactions that align with sellers’ needs. “Competitive bidding generates urgency among buyers, leading to quicker sales and closing timelines,” highlights Cowan. Auctions also offer unparalleled visibility for commercial properties, reaching a wide pool of potential buyers through extensive marketing campaigns. This larger buyer pool drives competition, potentially resulting in higher sale prices.
The transparent price discovery process facilitated by auctions is another major advantage. “The competitive nature of auctions often drives the price beyond the seller’s expectations, maximizing the return on investment,” points out Cowan. Auctions also eliminate the uncertainty associated with traditional negotiation-based transactions, as buyers participate with firm intentions to purchase. “Non-suspensive contracts ensure a secure and straightforward sales process, reducing the risk of deals falling through,” adds Cowan. Furthermore, auctions offer sellers the ability to tailor terms and conditions to their specific needs and objectives, providing flexibility in achieving desired outcomes.
In the face of increasing interest rates and the pressure they exert on commercial real estate portfolios, auctions have emerged as a quick and effective solution for sellers. By employing proper market analysis, strategic reserve price setting, and comprehensive marketing strategies, sellers can avoid risks and harness the power of auctions to achieve successful outcomes in the current market.
Galetti has successfully taken numerous industrial properties to market and sold them via auction, demonstrating the effectiveness of this method.
Recent successful sales include
27 Hippo Road in Springfield
A prime industrial property well-connected for logistics and manufacturing, with features like a double-volume warehouse and gantry cranes. Sold by Kopano Matlala and Guy Dowding.
96 Rabie Street in Fontainebleau
A mixed-use warehouse and retail property strategically located on Rabie Street
10-14 Watkins Street in Denver
A fully let industrial property with great ROI and highway frontage providing huge exposure.
Unit 2, SS 16 Old Mill Road & 10 Inyoni Street in Cape Town
Both are part of the Avacare Health GroupPortfolio, which offer light industrial spaces with backup power and climate control.
Other notable sales include 8 Skietlood Street in Isando, 123 and 109 Koeberg Road in Milnerton, 190 Rooiberg Street in Willow Park Manor, and 948 Cranberry Crescent in Midrand – all successfully sold, each presenting unique investment opportunities with features such as high yields, elite street-facing exposure, and prime logistics locations.
If you are an industrial property owner looking to maximize your investment, contact our auction team to find out how auctions can benefit your property portfolio.
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