Tenants are having to re-strategise their Navigating the Industrial Property Market in Cape Town: Rising Rents and Evolving Tenant Expectations in 2024 have changed, and the changes need to be noted by tenants;
The Shrinking Vacancy: A Look at Cape Town’s Industrial Space
The industrial property market in Cape Town is experiencing a significant shift. The amount of vacant industrial space is stabilising but at a low level. This scarcity of space is creating a competitive market for businesses looking to establish or expand (or contract) their operations in greater Cape Town, says Epping Property after the release of their latest Epping Industrial Property Index.
Rising Rents: The Impact of Limited Supply on Prices
The supply shortage has resulted in a surge in rental prices over the past year. As a result, landlords are now firmly holding their ground on rental rates, given the high demand and limited availability. This trend is expected to continue into 2024, making it crucial for businesses to budget appropriately for their future rental expenses.
The Tenant’s Challenge: Securing Suitable Premises
With the shortage of industrial space to rent in Cape Town, tenants are finding it harder to find suitable premises to grow or contract into. Tenants need to plan ahead and leave enough time to find suitable premises.
Longer Leases: Landlords’ Preference in a Tight Market
Landlords prefer tenants who commit to longer lease terms in this tight market. Moreover, this preference gives landlords a degree of security, as they know their properties will be occupied and generate income for longer.
Upping the Game: The Increasing Demand for Tenant Credentials
Tenants are having to “up their game” in Cape Town. Landlords request a history of rental payments, favourable references from previous landlords, business plans, and copies of up-to-date financials. This increased scrutiny is making securing a lease more challenging for businesses.
Efficiency and Modernity: The Evolving Preferences of Businesses
Businesses are increasingly recognising the importance of efficient premises. As a result, they are now considering factors such as height, stacking volume, number of columns in a warehouse, and natural lighting as key considerations when deciding upon premises. This preference for more modern industrial buildings is due to these factors. In addition, modern industrial buildings offer better working conditions and are more energy-efficient. Furthermore, they are designed to be more flexible and adaptable to the changing needs of businesses. Consequently, businesses are more likely to invest in modern industrial buildings to ensure long-term success.
The Premium on Modern Industrial Buildings: A Price Worth Paying?
Despite the higher rentals, businesses still prefer modern industrial buildings. Moreover, most of these spaces are now rented out, indicating that businesses are willing to pay a premium for properties that meet their needs and preferences.
To conclude, navigating the industrial property market in Cape Town in 2024 will require careful planning, budgeting, and negotiation. Additionally, businesses must proactively search for suitable premises and be prepared to meet the increasing demands of landlords. Ultimately, businesses must keep in mind that the industrial property market is highly competitive and must adapt to changing market conditions.