Confidence Boosters

Durban’s industrial property market is revealing a growing interest in logistics facilities, with the city’s ideal location for trade activity increasing demand for industrial accommodation. This is also the reason industrial rental growth in the city is increasing and developers are reflecting “ongoing confidence” in the Durban market, according to Jones Lang LaSalle’s (JLL) Durban Industrial Market Report for the fourth quarter of 2016.

“Property developers have responded well to the shift in the type of accommodation whereby a number of the pipeline developments are logistics parks and distribution centres.” the report says.  “It is worth nothing that Tongaat Hulett has been an active land provider in many of high-demand nodes like Cornubia and Riverhorse Valley and has enabled many developers to respond to the increased demand for industrial and residential accommodation in these areas. This has brought the workforce closer to many companies.”

Furthermore, with key market statistics indicating the prime rental range in some parts of Durban is from R62 to R67 per square metre, developers are willing to pay for prime location.

Current developments include:

Keystone Park – 1 000 000m².

Northfield Business Park – 50 000m².

Brickfields – 540 000m².

Clairwood Logistics Park – 350 000m².

149 Chamberlain Road – 17 086m².

Riverside Business Park – 6 286m².

N2 Business Estate – 100 000m².

JLL’s report also showed Durban rentals were higher than Johannesburg’s due to location and the vigorous demand for industrial space in Durban.

“Although Johannesburg may be a more centrally located City. Durban is home to one of South Africa’s largest cargo depots and is the second-largest trade hub in the country… proximity to a depot means the turnaround time for many logistics companies will be faster, resulting in increased productivity and increased profits.”

The report revealed overall average industrial rentals gradually increasing over the past five years, with the steepest increase between 2015 and last year.

“Newly completed, high-tech accommodation is seeing increasing demand and is still in short supply, allowing investors to charge rental rates at a premium.”

The JLL report said it was worth noting that Durban rentals “varied significantly” depending on location. “Rentals for large logistics centres also vary, with centres with good yard areas and loading facilities in excess of R60 per square metre for buildings as old as 25 years, while newer buildings are in excess of R65 per square metre.”