Demand Is Rising

The logistics warehousing sector is experiencing high levels of activity and interest, driven by the rise of e-commerce and global stock shortages that have slanted provisioning locally.

Post-Covid boom 

Galetti Corporate Real Estate director Wesley Cowan says that while COVID-19 shutdowns slowed down progress and gave people pause for thought before committing to decisions, the continued growth of e-commerce has seen a rise in warehousing. “The sector – specifically in Cape Town – can’t keep up at the moment. Both speculative developments and spec builds are increasing, with the next 12 months showing great growth,” he says. 

“One spec build in the Western Cape is still under construction and available. It’ll be finished in the second quarter of 2023 and I’m sure it’ll be leased by then.”

Jason Cooper, head of developments for Fortress Real Estate, says that while e-commerce continues to play a role in the growth the company is seeing in the industry, it’s not the only reason. “Most of the demand for space is from suppliers of the components of products sold through e-commerce channels. Most of the occupants at our logistics parks are distributors of commodities such as sugar, paper, and polymers, and providers of healthcare and pharmaceutical products. We have also seen strong demand in the market from food and clothing retailers,” he says.

“We believe that businesses are holding onto more stock and want their products to be closer to consumers because of the significant strain put on supply chains due to COVID-19, trade disruptions, riots, and strikes, among others. Disruption in the world supply chain has focused attention firmly on local distribution and having products available to get to market more efficiently.”

Tight space

Cowan says the lack of zoned industrial land in the Western Cape presents a challenge for logistics warehousing – and what is zoned is expensive, pushing up the total cost and base rental for any occupier. “There’s been such growth in Cape Town over the last few years for several reasons, so there are more people to service, and third-party logistics providers, retailers, and self-warehousing businesses have had to expand,” he says.

“Truworths has taken 4 000m² in King Air Industria near Cape Town International Airport; Takealot has 45 000m² and has leased two more properties with over 15 000m² across the road, and Richmond Park has filled up over the last few months.” He says emerging companies such as WeBuyCars have changed the vehicle sales model and demanded more space – now requiring warehouses rather than 500m² dealerships. “Warehousing is also cheaper to build and rent than retail space,” he says.

Cooper says that Cape Town still lags behind Gauteng and KwaZulu-Natal from a logistics point of view. “However, it offers more functional and supportive municipalities, which are attractive to investors.”

Prized assets

Fortress Real Estate is co-owner of Montague Park in Montague Gardens – a key centre for industrial property demand. The 60-hectare industrial park provides modern, attractive big-box warehousing on Cape Town’s main logistics routes. The scale of the park, and the developments within, make it a standout location for warehousing in Cape Town. On The Dot and Media24 have recently taken up 12 000m² there, and Takealot has expanded its distribution centre by 20 000m² to a total 50 000m². “We are very fortunate to have premium parks such as Eastport Logistics Park (in Gauteng) and Clairwood Logistics Park (in KwaZulu-Natal) in our portfolio. They are attracting large blue-chip tenants to our parks,” says Cooper.

Cowan highlights Equites’ 17 000m² distribution centre in Parow Industrial as a stellar spec build, which will be a Galetti Corporate Real Estate focus for the first quarter of 2023. “At nearly 3 000 hectares and zoned for industry, the property can cater to businesses looking for logistics warehousing space in the most central business location in Cape Town, feeding directly into most of the major roadways and transport links in the Cape Peninsula,” he says.