High demand for light industrial property as Durban's import sector flourishes
Category Chas Everitt Commercial Division
In the past year, the industrial sector in Durban has undoubtedly felt the effects of a volatile political and economic landscape, but as we move further into 2019, there is some good news that is expected to bring stability, growth and positive investor sentiment to this market.
So says Chas Everitt International commercial sales and rentals manager Keith Chetty, who expects Morningside and Greater Durban areas to experience significant purchase and rental activity this year as well as a strong development pipeline that will deliver several more modern buildings.
"Due to the escalating costs of fuel, interest and tax, 2018 saw many large companies downsizing to smaller properties, which meant that larger properties were left vacant for many months.
"Fortunately, as we ease into the new year, warehouse and logistics sectors can expect a major recovery, due to a big increase in imports.."
Meanwhile, he says, the new project pipeline in the city is substantial as developers have noticed the high demand for newer properties.
"Modern industrial properties are a far cry from their predecessors. Previously most businesses required immense warehouse space with office features to accommodate manufacturing facilities and a large number of employees.
"Today, due to the massive growth in imports and the decline of manufacturing, most new developments are light industrial properties, which primarily cater to the logistics and warehouse sectors."
Chetty adds that machinery and technology have greatly replaced labour, so a growing number of businesses also no longer require extensive office space.
Low industrial vacancies
Even amid tough economic conditions, he says, the industrial sector has remained stable over the past year and experienced low vacancies overall - a trend that is expected to continue throughout 2019.
"A major factor contributing to the low vacancy rate is improved trade efficiency at the Durban Port, which is boosting imports and increasing the demand for storage, logistics and warehousing facilities."
Major improvements have been implemented at the port, including upgrades to key roads, the construction of a truck staging area to reduce traffic, and upgrades to six berths in the Maydon Wharf Precinct.
"There are various other projects expected for this year, including lengthening the cargo track and an initiative by Transnet to increase the utilisation of rail at the port, Chetty notes.
"Ultimately, the goal of the project is to ease traffic and damage to roads.
"And as a result of these improvements, we are now receiving an increasing number of inquiries for industrial properties near the port.
"In fact, the demand for logistics and warehouse properties in this vicinity has increased to such an extent that demand is outstripping supply and many businesses are having to go further afield to areas with enough supply such as Pinetown, New Germany and Westmead."
The development pipeline
Drawing from recent statistics, he says that Greater Durban's industrial property development pipeline totals 250000sqm of new space, with the most notable developments planned being Clairwood Logistics Park in Mobeni; Cornubia Ridge Logistics Park; The Brickworks in Northfield; Northfield Business Park and
Mount Edgecombe Industrial Park
"These new developments will help satisfy the massive demand for light industrial properties as the import industry grows to new heights.
"In fact, over the past 20 years, the industry's role in the economy has phenomenally strengthened - from 1996 to 2007 it contributed 24% of the GDP and from 2008 to 2017 this contribution grew to 30%."
Throughout 2019, Durban's industrial market will be characterised by strong investor confidence, low vacancies and a healthy development pipeline.
Author: Chas Everitt International Property Group