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Development activity is taking place near Durban Port and the airport

Durban’s industrial property market ended 2017 on a high, with increasing average rentals and healthy developer interest, new analysis has found.

The research from JLL, based on the fourth quarter of last year, also shows the Port of Durban and King Shaka International Airport as having a positive impact on the growth of the city’s market.

Most development activity is taking place close to these key facilities.

“The chief executive of Transnet Port Terminals has identified key factors to improving the facilities and positioning it as an international terminal of choice,” the report says.

“The improvements to the port will benefit the industrial property sector as tenants will be looking to be situated near the improved facilities, which offer efficiency and higher quality technology.”

Developer interest is being seen in logistics and distribution facilities, and one of the major ongoing developments includes the 80000m² Clairwood Logistics Park, located 10km away from the port, which provides high-tech facilities. The first phase of the development, which will offer 22000m², is expected to be completed in the third quarter of this year.

Currently, there is 250000m² of industrial property development in the pipeline, JLL says. This includes:

Northfield Business Park – 70000m²Completion in Q1 2018.

Clairwood Logistics Park – 80000m²Completion in Q3 2018.

N2 Business Estate – 100000m²Completion in Q4 2018.

Development of the 1000000m² Keystone Park is also ongoing.

According to statistics, average industrial property rental rates increased from Q4 2016 to Q4 2017, with Grade A accommodation growing from R65/m² to R71/m². Grade B climbed from R55/m² to R58/m², and Grade C from R50/m² to R52/m². The prime rental rate for industrial property in Durban is from R65/m² to R75/m².

“Average rentals witnessed growth on a yearly basis, attributable to annual escalations, with Grade A accommodation recording the highest growth of 9.0% y/y. Grade B and Grade C recorded growth of 5.5% and 4.0% respectively.”

Distribution warehouse design and logistics will continue to be impacted by technology. Picture: Pixabay

This growth bodes well for the coming months, and with the latest government shake-up, Tristan Rasmussen, founder of Rasmussen Industrial Properties, says there is “certainly a buzz in the air”. He is also confident the rest of 2018 will be successful for the market.

“Business confidence is all about security and positivity, and in this regard I am sure the country’s decision-makers realise the urgency. It is not too late to put South Africa back on track.”

With regards to industrial property, Rasmussen says Durban South, Pinetown, Cato Ridge corridor and developments to the north continue to still show positive growth.

“We have also noticed a spike in inquiries and a definite shortage of industrial warehousing for sale. This all bodes well for the future as it should encourage developers to continue industrial park developments.”

In addition to the shortage of industrial warehousing, the Broll Property Group recently stated technology had enabled sophisticated logistics and changed the design of distribution warehouses, particularly those serving the retail industry.

This is also a consideration for developers and business owners.

This year will be marked by a strong focus on productivity, efficiency and flexibility, says Supply Chain Junction’s Michael Badwi.


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