How Industrial Rentals In Cape Town Have Grown And Why It Is Important To Know

Posted On Tuesday, 12 February 2019 16:27 Published by
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Rental growth affects values within the industrial property sector, plus is a large determinant of business costs.

 TONY-BALES-

Knowing precisely what market rentals are doing is also an essential part of all rental negotiations.

According to Tony Bales of Epping Property, property investors need to be able to time their investments at the best stage in the rental cycle. Likewise, businesses looking to enter into a new lease must be aware of the rental cycle as one may be able to lock into a longer term lease that will limit the upside in rentals if the market rentals are accelerating faster in the short term.

So just how much have industrial property rentals in Cape Town grown over the years?

Epping Property has analysed the historical data for industrial rentals in Epping Industria in Cape Town as far back as 38 years and says that the findings reveal that periods of low growth and/or periods of high growth can significantly influence shorter-term trends, but that the long-term growth tendencies are nonetheless apparent.

“Average growth in rentals over time, short growth periods, stagnant growth periods, and sudden downturns can sometimes skew one’s idea of long-term trends. However, the results speak for themselves and industrial rentals have grown by 9.23% per annum compounded over the last 38 years.”

Bales explains that during the higher inflation era of 1980 to 1999 industrial rentals grew by 12.76% per annum, and the average contractual lease escalations were 12% per annum during this period. During the lower inflation era of 1999 to 2018 industrial rentals grew at 5.81% per annum.

“Compounded over the last 12 years, industrial rentals have grown by 8.04% per annum.

Last modified on Thursday, 14 February 2019 12:10

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