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Cape Town industrial property market continues its growth trend

Cape Town industrial property market continues its growth trend

According to the latest report compiled by Baker Street Properties, the industrial property market in Cape Town is continuing on a positive growth trend based on its previous report from September 2015. The brokerage firm’s Industrial Property Director Lloyd Nussey adds, “Despite a volatile market and economy, the local industrial property market has been gaining positive momentum, supported by the main indicators such as an increase in gross rental and a reduction in overall vacancy rates.”

This growth trend can be perceived to be in line with other property market trends, such as the booming residential property market. Nussey continues, “It is apparent that there is an increase in companies wanting to establish their business and operations in the Western Cape for reasons such as good governance, infrastructure and local council’s support for new property developments.”

The full report is available for download on The Baker Street Blog at www.blog.baker-street.co.za

Summary of key indicators

  • Average gross rental: increase to R46/m2 (up from R44/m2 in Sept 2015)
  • Average gross rental for new developments: consistent at R64/m
  • Escalation rates: consistent at 8%
  • Overall vacancy rate: reduction of 3,52% 

Notable recent market events

Although there has been little change in vacancy rates overall, a small reduction is reported and can be attributed to tenants taking up space in newly completed developments such as Montague Gardens, Epping, Brackenfell and Airport where areas of over 1,000/m2 have increased significantly. Gross rentals have increased slightly, whilst new developments still demand a premium of R64/m2 given new efficiencies and sustainable materials improving efficiency of operations. For example, new industrial nodes such as Rivergate and Brackengate are showing increased signs of activity.

Logistics companies driving reconversions; demands for efficiency

“At Baker Street Properties, we represent the property needs and requirements of various logistical firms throughout South Africa. It has become apparent that a further decline in manufacturing is seeing old buildings being reconverted for logistics purposes, as these tenants continue to expand their property portfolio to reflect the right balance between property and location,” says Nussey.

Traffic and accessibility remain driving factors motivating relocation as traditional industrial nodes become increasingly more congested. This trend is supported by the significant investment into new industrial property developments along the N7 highway and Western Seaboard, as logistics operators and other industries seek property solutions that are outside of main congestion, but still within easy access to the main ports and arterial routes of Cape Town.

Nussey concludes, “We have invested into a separate web presence providing the market with a comprehensive view of all these new developments, and would encourage our readers to familiarise themselves with this high growth area of the market at www.bakerstreetN7developments.co.za.”

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