Although letting in all three property categories - office, retail and industrial - has been difficult, the industrial property market is showing the strongest activity, according to Emira CEO James Templeton.

Vacancies in Emira's industrial portfolio were at 10.9% in January this year but they have since declined to 6.4%.

At the June year end, Emira reported vacancy levels across its property portfolio of 11.5% - up from 9.2% in June 2010.

"Although deals are happening, the letting market is tough at the moment.

"There is some good interest from potential tenants in the space we have to let but tenants seem to be taking a long time to commit, probably because of the uncertainty in the economy both globally and locally," according to Templeton.

He said Emira's letting agents had to work hard to secure these recent industrial letting deals in an effort to offset rising vacancies in certain other premises.

In September 2010 Emira was given a mandate from Emira participatory interest holders to restructure the asset management fee payable to the management company by the fund in return for a lump sum, effectively internalizing the asset management function.

One of the benefits of this development was that rather than focusing on profitability of the manager, the Fund was able to employ additional staff to, among other things, facilitate the leasing of its own properties via leasing brokers.

"In addition to hiring additional staff, we restructured our letting strategy and introduced a range of broker and tenant incentives - including reduced rentals - to shift the vacant space we have. What we are seeing now in these news deals we have been done is the market's response to this."

Among a number of other deals across all three sectors concluded in the period, the Fund has let around 11 500 square metres of industrial space in three separate letting deals in industrial parks in Johannesburg and Durban.

These deals included a 3 472 square metre warehouse at 1 Medical Road, Randjiespark, Midrand, which had been let to multi-national pharmaceutical company Johnson & Johnson on a five-year lease with beneficial occupation from October 1; a 3,804 square metre industrial facility located at 96 Loper Avenue, Spartan which has been let to blue-chip, international engineering firm Bateman Projects for five years with effect from June 1 and a 4 200 square metre warehouse in Inanda Road, Durban which had been let to a local logistics operation on a three-year lease.

Average rental levels on the deals struck was R35/square metres and the average lease term was just over four years.

Source: I-Net Bridge