The Old Mutual Property Group is constructing an R83m expansion of its Phumelela Park, an industrial park in Western Cape, on the back of strong demand for quality industrial space.

Orin Varney, regional leasing manager for the group, said demand for space had gained momentum over the past 18 months, and all four Old Mutual industrial parks in the greater Cape Town area, including Phumelela Park, Montague Gardens Industrial Park, Racecourse Gardens, and Omupark, were now fully let.

Varney said the Old Mutual Property Group was adding another 28,000m² of industrial space to the park in response to the demand.

"There is a shortage of good-quality A-grade industrial space in Cape Town."

Varney said Old Mutual still had spare capacity, namely more land available for development at Racecourse Gardens. He said any further development would be taken in "phases or batches".

The group is confident about letting out the additional space at Phumelela Park.

"There is very positive interest in the park," Varney said.

Andy Beddow, a director of industrial and commercial property broker Baker Street Properties, said there was "huge demand" for good-quality industrial space and there was an undersupply of land zoned for industrial purposes in the greater Cape Town area.

"The price of land is rising rapidly, and the average price of land zoned for industrial purposes in popular areas has exceeded R1,000/m²," said Beddow.

He said rentals would surge in new industrial developments because of the increasing land and construction prices.

Beddow said existing industrial space would also see "healthy growth in rentals".

Business Day