Two primary drivers of potential growth for the industrial sector are capital investments into automotive and mining-related industries and South Africa’s ability to develop its infrastructure as a transit hub to serve the Southern African Development Community (SADC) region.

In this regard, the government is placing emphasis on infrastructure development by offering tax incentives for businesses operating within the eight Special Economic Zones (SEZ), with three additional SEZs being planned by the Department of Trade and Industry.

Transnet’s 10 year, R350 to R380 billion worth of capital projects to national ports and rail has seen the recent R4.2 billion upgrade of the Cape Town Container Terminal (CTCT) at an estimated   40% increase in container handling capacity.  As a result, occupiers of port bound warehouses are relocating to new industrial nodes outside the congestion zone around Paarden Eiland and Montague Gardens.

Brick-and-mortar retailers continue to drive demand for warehousing and logistics space and show increasing investment into warehousing management systems for improving supply chain capabilities to e-commerce business.

“These projects bode well for future growth in the industrial sector,” says Johann Nell, National Asset Manager, Industrial, Redefine Properties.

Manufacturing continues to face strong headwinds with erratic demand and policy uncertainty.

“As a result of these trends, tenants are looking to consolidate manufacturing, assembly and distribution facilities to reduce overheads, which dictate changes to business requirements down the value chain,” says Nell.

“Our ability to put together bespoke developments affords us the opportunity to increase the quality of our value offering. In the Western Cape we are accommodating mixed use offerings at Brackengate 2 Business Park by adding a 3,000sqm Planet Fitness and 8,200sqm Brights Hardware into the precinct.”

Favourable lending terms is another big driver as owner occupiers who wish to exit the leasing market are taking on debt, freeing Redefine’s capital for reinvestment. This trend is particularly driven by businesses setting up supply chain networks in South Africa. To take advantage of the trend towards owner-occupancy, Redefine has entered into joint venture agreements on certain developments e.g., Bidvest at Brackengate 2.

Brackengate 2, a joint venture with VDMV Property Group is a newly established business park located next to Shoprite’s Cilmor Distribution Centre. At Brackengate 2, mid-sized units are being planned to accommodate value adding businesses that will benefit from the location.

Redefine’s focus on refurbishment and improvements of existing assets has been key to maintaining relevance through sustainable asset retention within the primary industrial nodes on a national basis. Furthermore, incorporating green design elements such as LED lighting, daylight harvesting, solar power and grey water systems on new and existing properties has reduced operating costs for tenants. 

Atlantic Hills, Redefine’s JV with Nedbank CIB and Abland, is situated on the Potsdam Interchange and together with the City of Cape Town this extends the M12 motorway from Giel Basson Drive onto the N7. The new cold storage facility owned and occupied by SA Fruit Terminals will be the first major development at Atlantic Hills to break ground.

Located near Durbanville, Montague Gardens and Welgelegen, Phase 1 of Atlantic Hills is completely sold out.  Negotiations continue for sale and leasing on the balance of Phase 2 and Phase 3, in all totalling 44.4 hectares of developable land.

“We remain committed to working with the best local partners and providing the highest quality space available in the market. Brackengate 2 delivers on the promise and offers the warehousing and logistics market quality industrial land that links with intermodal infrastructure,” says Nell.

“Our continued focus on people-centric property management is testament to our sustained tenant retention.”

Recently completed projects at Brackengate 2 include Bidvest’s Plumblink 6,791sqm and Spec 5,642sqm buildings as well as the new GEA facility measuring 8,973sqm. Having sold most of the Stikland erven Redefine’s focus is to optimise the main business park precinct for lease driven developments, offering prime highway exposure to a large portion of the scheme.

“The outlook for industrial property remains promising and we expect an increase in market share in prime industrial nodes through acquisition and development,” concludes Nell.