Cape Town industrial market on the up

(Cape Town 25^th November 2002) Investors – one of the all-important barometers as to the state of any industry – are opting to remain in commercial property following its continuing and consistently positive performance in the Western Cape, and in particular Cape Town said Broll Property Group director William Wakefield.

“This confidence is further bolstered by trading conditions in the past six months that indicate tenants are receiving fuller prices and a firm tendency towards longer lease periods – clear indicators that the industrial market is in a robust condition,” added Wakefield.

“Coupled with these pointers is the emergence of phenomenon unheard of in recent times – that of numerous tenants vying for one property.”

Wesgro sources confirm the solid performance of the Cape economy over the past year.  Tourism inflow has been positive and statistics show a 19% increase in foreign arrivals.  In addition exports – largely thanks to the weakening of the Rand – have received a welcome boost and this is verified by an increase in harbour traffic.

“On the more sombre side is an understanding that the present interest rate levels may cause this year’s 3.1% real growth to falter.  However, there are increasing indications that the present interest rate levels may fall-off in the short to medium term – all positive news for this sector,” said Wakefield.

The resistance by developers over the past four years to embark upon speculative developments combined with a noticeable growth in the manufacturing and export sector has seen available space snapped up.  This has resulted in a particular shortage of large warehousing and factory space.

According to Broll, proactive developers - with an eye for the long-term opportunity - could well be matched to suitable business partners requiring space.  Professionals from the commercial property industry are well versed in this type of matchmaking.

Broll statistics indicate that escalation rates have softened slightly – now standing in the 8% to 11% range.  This change however, comes on the back of long-term leases with landlords demanding terms of three to five years.  Furthermore, the shortage of suitable stock places landlords in the enviable position of being able to select tenants.

Escalations in new building costs – as reported earlier in the year - has turned the focus onto the redevelopment of older buildings.  This tendency has been given impetus by the success of the recently-introduced City Improvement District concept (CID) and the establishment of region-specific industrialist associations. 

Increased funding and communication in these areas has contributed to improved security and services particularly in older areas that had begun to fall into a state of relative neglect.

“investors have shown that the Western Cape industrial property market is a solid yet ever-changing landscape and presents a number of unique opportunities for tenant and landlord alike,” concluded Wakefield.

Broll is South Africa’s largest independent full service property group with operations in all major centres.  The Company recently entered into an agreement with US-based Insignia – the world’s largest commercial property organisation – to represent it throughout Sub-Saharan Africa.

For further information : William Wakefield
                                         Broll Property Group
                                 Tel : 021 419 7373 / 082 807 0666

 Issued by                      : Cullum Johnston
                                         BHA Communications
                                 Tel : 021 683 2685 / 083 212 2455