Coupled with e-commerce growth, the industrial property sector has outperformed other commercial property segments, says Inospace. Picture: Supplied
The demand for small-format logistics and industrial spaces continues unabated, with Inospace annual rental growth now in double digits and keeping ahead of inflation, according to Jacques Weber, chief operating officer of Inospace.
He commented after Inospace, a leading owner and operator of serviced logistics parks, announced the acquisition of two last-mile logistics properties at Cape Town International Airport for a total cost of R35 million, from a private investment fund.
Smaller industrial and last-mile logistics assets have been insulated from local and global economic shocks due to growing demand for smaller-format logistics warehouses and distribution centres. Coupled with e-commerce growth, the industrial property sector has outperformed other commercial property segments.
Located in Airport Industria – across the road from the airport and less than 20km from the Cape Town CBD – Sky Park and Alkin Park were fully let to 12 logistics, warehousing and/or light-manufacturing tenants. The parks, jointly measuring 16 118 square metres, would be rebranded and renamed Sky Works and Fly Works, said Weber in a statement.
Inospace chief investment officer David Bernstein said the company continued to grow despite interest rate headwinds. Since the beginning of the year, Inospace had acquired close to 200 000 square metres of industrial park, across 16 assets in Cape Town and Johannesburg.
However, he said valuations had cooled down over the past two months as interest rate hikes and load shedding had taken their toll on acquisition yields and investor sentiment.
Airport Industria is a bustling business node that has grown in the past decade, mainly due to the surge in travellers and goods coming through Cape Town International Airport.
About 49 159 more domestic travellers passed through the airport in July than in June this year, according to the latest figures from the tourism agency Wesgro July Report.
In Cape Town’s airport node, Atterbury Property owns large tracts of developable industrial land that enjoy high demand because many companies opt to develop large distribution centres in this location.
In one of the larger new developments, Truworths, in partnership with Atterbury, is building a new R900m Western Cape distribution centre in the nearby King Air Industria Park, an Atterbury Property and Old Mutual Properties development.
“If we continue purchasing well-let quality properties at prices between 50% and 60% below replacement value, we will remain one of the few locally focused high-growth property groups,” said Bernstein.
He said while the airport might well be the exit point for many investors, “we see it as the entry point for untapped investment opportunities”, despite negative risk factors such as load shedding, inflation and rising interest rates.
BUSINESS REPORT