“Based on property fundamentals, we believe that the industrial sector is in the pick-up to boom phase of the property cycle and is rapidly approaching the boom phase,” she says. “We are of the opinion that the industrial sector has a shorter cycle than the retail and office sectors and is more resilient to changing external factors: Supply in the industrial sector is generally less capital intensive and the structures are simpler in design, reducing the construction lag. This allows supply to react faster to demand and unpredictable economic shocks that affect the wholesale and manufacturing industries."  

“Nodes with good access to main arterial routes, airports or highway exposure are experiencing vacancies at levels of below 2%. Even though a slow down in retail will affect the demand for distribution space, we believe demand for specialised and high tech industrial space is still robust.
“Although the world is currently experiencing a general economic slowdown,  South African economic fundamentals still provide sufficient impetus for growth in the Industrial sector.“

Nosarka says OMIGPI Research’s view is that this sector could well outperform retail and office property in 2008 due to high levels of demand, low vacancies coupled with supply limitations resulting from high land and input costs, notably steel, and limited electricity supply.

OMIGPI, focusing on lower risk tenant-specific developments, is currently busy with industrial projects amounting to more than R500 million, the largest being expansion projects for tenants of SA Corporate Real Estate Fund, the country’s third largest listed property fund.  It has also just completed a R93 million warehouse development in Jet Park, the prime Johannesburg industrial and commercial township near OR Tambo International Airport.