Industrial market - A TV CABINET OR TWO

By Pauline Larsen

An unexpected housing boom opens a niche for light industry

Johannesburg's languishing northwestern industrial nodes have found a new niche in the form of decor parks. They are on the doorstep of some rapid-growth residential suburbs, and there's a clamour to furnish new homes.

Lazer Park, Kya Sands and North Riding do not have the characteristics of prime industrial nodes. There is no rail service, little freeway exposure and limited access to labour. So zonings are limited to clean, light industrial uses. And demand for homes is ensuring that industries that fit this mould flourish.

A good example is North Riding. In 1993, just 16 property sales took place. By 2003, that figure had leapt to 178. So far this year, 67 properties have been bought in the suburb.

Research from Absa shows that the average price for small houses or townhouses on the West Rand has risen 12,1% in the past quarter. In Johannesburg, this figure is only 5,7%.

David Green, MD of Pace Property Group, which specialises in industrial broking, says the deals done in North Riding over the past few months have been predominantly to place furniture traders, door manufacturers and various homeware retailers in decor parks.

Industrial tenants are notoriously price-sensitive. Which is why tenants from existing decor parks in Kya Sands are planning to move to the new Deco Park development in North Riding, where rentals are cheaper.

"Compared with R60/m² at competing developments, tenants can move into Deco Park for R33/m²," says Green.

Makers and retailers of fixtures and fittings for homes still comprise a niche market, which will probably remain small and focused. "Specialist space such as decor parks isn't likely to have a dramatic impact on industrial property," says JHI broking head Wayne Wright.

"I don't think this trend is a flash in the pan," argues Colliers International broking head Lin Strauss. "We have run out of space close to town, which makes northwestern expansion inevitable."

Estate agents agree that the market is moving apace and point to growth in Olivedale, Bloubosrand, Jukskei Park and even Hartbeespoort Dam. Pam Golding Properties area agent Jarek Pochopien is selling three to five properties a month in these areas. And he says Johannesburg North and Jukskei Park are among Johannesburg's most upwardly mobile suburbs. "In 1999, we couldn't get a bank to grant a bond for R520 000 on a house in Jukskei Park. That same house has just sold for R1,2m."

And it's not just the buying market that's busy; it's the letting market, too. Some of Pochopien's clients own several buy-to-let properties in these suburbs.

Even plans to develop low-income housing estate Cosmos City in the northwest do not dampen the enthusiasm of industrial brokers. "That'll just mean more people needing to buy more furniture," says one.

Financial Mail