Mark van Vuuren, asset manager for listed property unit trust SA Corporate Real Estate Fund, which has a strong exposure to industrial property, says there is little industrial property stock available generally in Gauteng, which has the largest industrial property areas in the country.

“This is exacerbated by the ever-increasing cost of land, if you can get it, and escalating building costs. These factors and the shortage of supply have a huge effect on existing rentals,” says Van Vuuren.

SA Corporate’s industrial property portfolio has experienced an increase in industrial rentals of 25% to 30% over the past year.

Van Vuuren says the users of industrial space are looking to older areas as opposed to new industrial areas because rentals are cheaper, as are land costs. He says such areas include Clayville, east of Midrand, Anderbolt, on the East Rand, and Boksburg East.

He says users of space, particularly big-box users requiring warehouse distribution facilities, may look to areas such as Sunderland Ridge, west of Centurion, which has a lot of agricultural land available. Wadeville, in the east of Johannesburg, and Germiston will also be attractive.

Van Vuuren says Clayville land titles, for instance, cost R400/m² to R450/m². Industrial land in other industrial nodes in Centurion cost R850/m² to R1000/m².

In new, popular industrial areas such as Linbro Park and Longmeadow there is hardly any land available for industrial property development, says Van Vuuren.

Areas such as Longmeadow achieve rentals of R50/m², whereas Clayville is achieving rentals of R26/m² to R30/m². In Centurion, rentals of R40/m² to R45/m² are being achieved.

Property economist Francois Viruly, of Viruly Consulting, says South African development will increasingly be turning towards “brownfield” developments in the quest for space.

“In other words, they will look at the re-use of existing land, which has the necessary infrastructure.

“In the next few years we will see some of the older industrial areas being redeveloped because they often have existing infrastructure, which can easily be improved.”

Viruly says cheaper land on the outskirts of the city may look attractive, but the risk associated with the provision of infrastructure may make such land less attractive to the development community.