The Industrial Sector is Transitioning and New Trends Emerging

Over eight million residents call the City of Johannesburg home and this number consistently grows year-on-year as job opportunities draw in more people from around the country. It is no secret that the city is one of the best-performing in terms of growth and contribution to national GDP. Johannesburg's output is currently at R688 billion or R746 000 Wealth GDP per capita.

The development pipeline for industrial and commercial property is respectively, 304,799sqm and 398,057sqm at present. The city is a powerhouse, providing a headquarters for many blue-chip and multinational companies. It is also home to South Africa's stock exchange, the JSE.

The industrial sector, in particular, is undergoing a massive transformation as the import industry expands to new heights, thus pushing up the demand for storage, logistics and warehouse properties. Imported goods contribute a significant 30% to the GDP - most being consumer goods that are competitively priced.

Previously, the strength of the industrial sector was greatly owed to the manufacturing industry, however, over the years it has been declining. In 1995, manufacturing contributed 21.4% to the country's GDP, while this dropped to 13.5% in 2016. The rise and decline being experienced in the industrial sector are inevitably impacting industrial real estate - on the one end of the spectrum - the decline of manufacturing means that the demand for huge factories and production plants is waning. While, on the other end, the rise of imports is pushing up the demand for light industrial, logistics and warehouse space.

As a result of this shift, a new type of industrial tenant and buyer is coming to the fore in larger numbers - one with specific requirements which developers are taking notice of. These requirements include:

1. Access and large yard spaces

As imports grow, many new companies are being established or expanding to cater for the storage and distribution of various goods. For this, companies require easy access and large yard space for trucks and cargo vehicles to manoeuvre around, as well as gain entry into storage or warehouse facilities

2. Larger maxi units

Big boxes are attracting massive inquiries from companies in the distribution and logistics sectors. Their biggest requirement is high-volume warehouses that can stack up large quantities of goods with efficiency and minimal labour using the latest technology.

3. Safety and security

Companies operating in this sector have to protect expensive vehicles, equipment and goods. Over and above than this, they also need to protect their staff members who are working directly with these material items and may be easy targets for criminal activity. Because of this, an increasing number of companies require industrial units in secure business parks that have 24/7 security, patrolling guards, access control and CCTV cameras. Of course, these estates come with added perks such as adequate parking, regular maintenance and high-quality infrastructure.

Linbro Business Park is a great example of a secure business park - listed with 3CUBE Property Solutions is a 2,779sqm warehouse to let, with office and showroom features.

4. Location

A growing number of logistics companies are seeking industrial units close to the OR Tambo International Airport as this makes it easy to pick up goods from the cargo terminals. This also means that travel time is quick, thus reducing the cost of petrol and wear and tear on trucks. Emerging from this trend is the high demand for properties in Kempton Park (the home of the airport) as well as the surrounding towns of Germiston and Boksburg. Furthermore, the future of these towns looks promising as development plans are set to heighten demand for properties even further when the Ekurhuleni Aerotropolis programme transforms Kempton Park into an airport city.

South Africa's industrial property market is undoubtedly undergoing an incredible transition. To find out more about the available properties that cater to the booming import sector, speak to our helpful agents at 3CUBE Property Solutions today.