The industrial property sector in Cape Town has performed well for the last 2 years. However, the most recent Epping Industrial Property Index shows that the industrial property sector may finally be slowing. Is this a slowing of the resilient Western Cape economy, or is this simply the Western Cape falling back in line with the rest of South Africa? Businesses in Cape Town seeking premises have had very few alternatives to consider in recent times. While this slow down has not yet translated into a greater choice of premises to rent, this may be the start of such a cycle?
The latest Epping Industrial Property Index (2017_Q4) confirms that the amount of space available for rent has once again, dropped to very low levels.
Epping Industrial Property Index
What do these statistics show us about the current Industrial Property Market?
- The amount of industrial premises to let remains very low (less than 3% vacancy). However, year-end vacancy levels are historically low in Cape Town due to certain industries taking excess premises only for the Nov to Feb time periods. An example of this is the movie industry. We would expect more vacant space for rent to be released to the market during the next few months.
- Various larger spaces were rented out at the end of 2017, thus reducing the average size premises available for rent.
- Asking rentals during the last 18 months have slowed down. This is due to landlords now more agressive in securing and retaining tenants. In addition, the lack of new industrial developments coming ot the market, which typically raise the average asking rental.
- Availability of property for rent and for sale continues. Consequently, tenants wishing to move premises should plan well ahead of time.
The industrial property market in SA holds huge value. Utilised for a multitude of business types, uses range from versatile to efficient. At this point in time, it is difficult to say which industrial sectors, in particular, are slowing the most.
The “top rated” buildings have the highest specifications. These buildings tend to let first. While these “top rated” properties may appear to have a higher R/m², they usually have much higher ceilings. They thus actually offer a lower R/m³ rate to tenants. Boasting full compliance to modern fire regulations, lower electricity costs, advanced building materials and better efficiencies for businesses, we give our clients access to premium industrial property. However, the overall amount of space for rent is still low. Companies need to plan their moves well in advance to ensure the right space is found on time.
The only index for industrial property in Cape Town
These statistics back up what is happening on the ground, within the industrial market. There is now a significant shortage of properties to rent, especially for the larger, more modern buildings. For the first time in a while, developers have started building warehouses “on spec”, pre-empting the tenant’s range of needs. With vacancy at around 5%, there is a low availability industrial property to rent. These statistics show the continuing confidence medium and large businesses have in Epping Industria. Epping Industrial Property continues to offer excellent all-around value to both landlords and tenants.
This index is designed to assist property owners, tenants and other stakeholders in assessing the industrial real estate market. Especially in Cape Town. Epping houses many of the most significant industrial companies in the Western Cape. It is an excellent gauge for industrial property in the entire Western Cape. The statistics forming the Epping Industrial Property Index is put together by the only company who works with landlords and tenants in Epping every day. Epping Property is the only company to have surveyed the actual industrial spaces when completed, throughout the Epping area. Having measured the total square metres available for rent, our statistics are the most accurate available.
Sales of properties in Epping Industria
The above information is an excellent indicator of rental demand and supply. Hereunder are all the properties sold and transferred during 2017. (For interest purposes, we have kept the transfers of 2014 and 2016 also recorded). Please bear in mind that properties have different building size: Erf size ratios as well as various other characteristics – it is only meaningful to compare similar properties. Please feel free to contact Epping Property for more details on property values in Epping and the Central industrial areas of Cape Town.