Signs are still pointing in a positive direction for the Industrial property sector according to the latest FNB monthly property wrap discussion outlining information gleaned for the 1st quarter 2023.
According to the Property Broker Survey Report, the three coastal metros, namely eThekwini, Nelson Mandela Bay and Cape Town, are where the relative market strength lies because there is a comparatively strong demand level relative to supply in these areas. The survey also looked at the average time on the market for occupied industrial properties. Results indicated that for occupied industrial properties the time was 16.51 weeks as opposed to 23.44 weeks for retail properties and 25.27 weeks for office space. Vacant industrial properties also averaged the shortest average time on the market of the three industrial segments being 16.64 weeks, as opposed to 21.91 weeks and 26.03 weeks respectively. Additionally, this was the 9th consecutive quarter in which indicators are pointing to a declining average time on the market in the Industrial class, thus pointing to a very significant improvement in the demand-supply balance in this market over the past 2 years.
Another factor that came to light in the survey of the Office and Industrial properties was that the average time on the market for vacant properties is also slightly longer than that for occupied properties, which was not previously the case.
This may suggest that properties that are tenanted are becoming a relatively more attractive investment option in a tougher economic time when it may be harder to find new tenants.
Interestingly this positivity is also noticeable in the Industrial Sector along the North Coast of KZN where demand for commercial property has steadily increased in recent years. Kerry Ritson, who heads up Local Real Estate’s Commercial Division, had a very active year last year with 75% of the clients being North Coast based end users who occupy and operate out of their own premises. Deals were concluded across the spectrum from R1m to over R20m and this year is also off to a positive start.
“Because Ballito has a unique location that is along a transport corridor with easy access to harbours both in Richards Bay and Durban, plus an international airport, many successful businesses have diversified into other opportunities” says Ritson. “This has led to a high demand for rentals which is driving investor purchases. A good example of this is Raddical Park. Raddical Park was a brand new 4000 sq. metre commercial development where Local Real Estate assisted the developers with their marketing. We placed all the tenants and it was fully let within 4 months with leases ranging from 3 to 5 years. We are also working in another new commercial development, Reha Park, that is nearing completion and just one week after we started advertising, we have placed 4 tenants on 3-to-5-year leases.”
“Another development we have also sold several sites in has been North Point Ballito” continues Ritson, “where two of the sites will be investor warehouses for rental purposes, one being approximately 6000 sq metres in size and the other being approximately 2500 sq. metres in size.” North Point Ballito is a 380,000 square meter business park incorporating 58 serviced sites that has been planned as a multi-building development that will accommodate a range of uses from light industrial to office space in an integrated parklike setting. North Point Ballito is situated between the N2 and R102 at the northern point of Ballito’s town limits.
“KZN is the second largest manufacturing sector in South Africa, after Gauteng and accounts for 30% of SA’s exported manufactured goods. Including this factor as well, Ballito is clearly a town that is still moving forward in an upward trajectory in the commercial arena.” concludes Ritson.
For further information on commercial opportunities contact Kerry Ritson on 082 883 7929 or email
[email protected]