DISTRIBUTION and warehousing companies’ increasing demands for ever larger buildings are set to fundamentally change the way industrial property is marketed and leased, according to Viv Delbridge, head of commercial and industrial leasing at Old Mutual Properties.

Delbridge says that distribution companies are demanding more space in their warehouses in order to store more goods, but that with automated storage and retrieval systems, industrial buildings are getting higher rather than expanding just horizontally.

“What is increasingly important to distribution companies is not the floor area of a building, but its cubic capacity. With the introduction of computer controlled racking systems, companies can make much better use of height in most new warehouses, rather than taking more floorspace. So we will gradually see property brokers’ details of new warehouse space include not just the floor area of the building, but also its cubic capacity, and over time it is capacity which will become most important,” predicts Delbridge.

She says the focus of new industrial developments by Old Mutual Properties is on cubic metres. The developments, to be built to tenant requirements, are to be known as M³ Distribution Parks because of greater volumes created by having higher eaves than the conventional 6-8m.

Delbridge notes several warehouses have been built to more than 20 metres to the eaves and more are planned. These tend to be for the owner-occupier market as investors are typically more comfortable with generic premises that can be relet easily should a specialist tenant not renew their lease, she says.

“By building tall to 20m or over, however, operators and the developers can make a considerable saving on the cost of the land which would be needed if they went for a more usual 6-8m eaves height. With the cost of industrial land having risen steeply in most urban nodes over the last year, this makes good commercial sense for both developer and tenant.

“There are also economies of scale for construction costs in building higher rather than wider. While foundations need to be deeper, the roof is smaller and the additional steel work needed for the frame hardly adds to the overall cost.”

According to Delbridge, the tall(er) building trend is coming at the right time for the industrial property sector as it faces additional costs from strongly escalating steel prices, premium prices due to land scarcity in some areas and the cost of infrastructure in some cases. With these additional costs of construction, money saved on land is even more important.

“The clincher,” says Delbridge, “is when owners and their property brokers begin quoting availability in terms of cubic metres rather than square metres.”

Publisher: Cape Business News
Source: Cape Business News