Rentals of R35/m² for new, prime industrial space in the greater Cape Town area are in the offing by early 2006, says Orin Varney, Western Cape leasing manager of Old Mutual Properties.

He says this level of rentals is anticipated for tailor-made warehousing and distribution premises, with high eaves for greater stacking areas and large yards for good vehicle turning space, in newer areas such as Montague Gardens.

“Already the R35 mark is being reached for a development of smaller, 600m² units in Montague Gardens,” he says.

“Development opportunities in the industrial market continue to be encouraged by a lack of space in key nodes. With business confidence at a high, and the lack of large areas, rentals in prime areas have shown growth of more than 20% in the last year. “

Varney says rentals have been rising in an active market that has seen potential purchasers seeking to owner-occupy premises struggle to acquire suitable property. 

“Given the popularity of property as an asset class, owners are not selling  and potential purchasers are having to rent.  Those businesses trying to seek short-term leases in the hope that the cycle will turn in their favour for purchases are finding that landlords are negotiating firmly for leases of a minimum of three years. “

Varney says in line with a worldwide trend, local businesses are prepared to pay a premium in rentals for functional, efficient space tailored to their needs.

He says where businesses find appropriate premises, they are prepared to strike longer leases.

“A case in point is a 10-year lease, introduced by Broll,  on 3 291m² of warehousing and offices in Gardener Place, Pinelands.  The lease has a value of R18 million.  Negotiations on another long term lease, for 7 000m²of warehousing, are nearing finality.”

Ends

ISSUED FOR  Old Mutual Properties

BY  Michael Kerkhoff & Associates

INQUIRIES Orin Varney 021-530-4500

                    Mike Kerkhoff 021-424-5280