According to the SAPOA report, South Africa’s total available warehousing accommodation is approximately 5,700 000 m2 with Johannesburg accounting for over two thirds of this. This makes Johannesburg the largest market for commercial warehouses in Africa.
While there appears to be a shortage of suitable “A Grade” stock of warehousing in units over 10,000 m2 , it does not appear to be the right time for investors to develop these on spec, as potential renters are apprehensive of entering into long term lease arrangements (7 to 10 years) which such developments normally require.
With the downward trend in the S.A. economy, many renters are moving towards smaller or “midi” units with a view to consolidation and avoiding long term lease agreements. Renter preference has also moved towards the secondary nodes (Midrand, Londmeadow, Modderfontein and Linbro Park being the most popular) because of lower rentals and other cost savings.
While gross rentals of R 58 / m2 are still achievable in the prime nodes (dependant on superior location and building specification), the general trend is towards softer rentals in all other grades and categories. The midi and mini sectors are particularly affected, mainly due to oversupply and mediocre manufacturing performance by the renters.
Vacancies for industrial property have increased slightly and are now estimated at 7%
Certain sectors in the industrial property market are going through a period of consolidation with largely fluctuating vacancies, less demand and stagnant rental. We project that most of the demand during the next twelve months will be driven by consolidation and physical relocation to other nodes.