Old Mutual Properties announces the development of six new distribution parks - offering a range of warehousing and factory space on 50 hectares of prime commercial land near Johannesburg, Centurion (Pretoria), Durban and Cape Town. With Michael Schirnig, head of corporate real estate at Old Mutual Properties

LINDSAY WILLIAMS: A lot of people I’ve been speaking to have been saying it’s the top of the property market - certainly the JSE listed property market - but I’ve been hearing that for a year. You clearly think there’s a shortage in warehousing and factory space - is that the reason for these developments?

MICHAEL SCHIRNIG: I think property - like any of the other sectors - has niches. You’ve got retail, office and industrial - clearly retail has done very well, and residential has been booming - but the retail success has been pushing back in the supply chain, and there’s a huge need for quality well-located warehousing, and that’s what we’re feeling at the moment.

LINDSAY WILLIAMS: What sort of clients are you aiming at?

MICHAEL SCHIRNIG: Mostly logistics companies, so the old-style factory - the greasy grimy stuff - is a thing of the past for most investors. We’re looking at the cleaner logistics operators - we need big turning circles, high eaves so that they can stack their stuff. Good quality logistics businesses can make the most of the locations that we are offering.

LINDSAY WILLIAMS: Logistics is a word that has come into use over the past two to three years - what does logistics mean, exactly? You talk about grimy - versus logistics - suggesting it’s clean, what does it mean?

MICHAEL SCHIRNIG: It’s mostly about throughput - the distribution of products when speed is of the essence. Every hour, every day that the stock lies idle, or the trucks lie idle costs that distributor money - so a lot of the emphasis is on good locations close to the market.

LINDSAY WILLIAMS: So distribution of fast moving consumer goods (FMCGs)?

MICHAEL SCHIRNIG: Yes, there’s FMCGs, it goes through into fashion, and the furniture guys, cable - anything that needs to be moved is moved increasingly by logistics companies.

LINDSAY WILLIAMS: This is a niche that you’ve identified - are you seeing any other growth at Old Mutual Properties? I can see where you’re coming from - 75% of freight is moved by road in SA. Are you seeing any other growth nodes - apart from this type of development?

MICHAEL SCHIRNIG: Clearly we are still working very nicely off the back of residential developments - where we’ve done some good stuff in Cape Town converting old tired office blocks into very sexy loft apartments. We’re doing that now in Johannesburg - at a slightly different price point. Retail is still booming - most retail property owners are building on to their existing retail centres, or trying to get new stuff off the ground. Industrial is getting hotter at the moment. I think offices are probably six to eighteen months away from also coming back - because we’ve got good fundamentals in the economy. We’re growing, there are low interest rates - so a lot of that will feed through into demand for good quality premises of varying types.