IndustrialVacancy - SAPOA · iuri SurVe rerT 2013: full year 2013 Sapoa cont act Det ailS t 011 883...

Report compiled by IPD

IndustrialVacancySURVEY

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industrial Vacancy surVey report

2013: full year 2013

SAPOA cOntAct detAilS

T: 011 883 0679 F: 011 883 0684 Email: [email protected] Web: www.sapoa.org.za2

2013: full year

key findingsAs at the end of 2013, the vacancy rate of industrial property as recorded by IPD was 3.3% - down from 4.7% a year ago and 7.1% when vacancies peaked in 2009. The declining vacancy rate has resulted in an above-inflation base rental growth which underpinned returns over the past year. The industrial sector was the leading performing sector for the year in returning 17.1%.

On a segment level, Warehousing and Light Manufacturing recorded the lowest vacancy rates for the year ended December 2013 with 1.7% and 1.2% respectively.

Vacancies among High tech industrials, the most defensive industrial segment through the cycle, remain low at 2.3% while Standard Units recorded the highest vacancy rate at 5.3%.

On a regional level, the lowest vacancy rate was recorded for the greater Cape Town area where an aggregate vacancy rate of 1.5% was recorded across 64 properties.

figure 1:long term industrial vacancy rate

figure 2:long term industrial base rental growth





As at the end of 2013, the vacancy rate of industrial property as recorded by IPD was 3.3%. This is well down from 4.7% a year ago and 7.1% when vacancies peaked in 2009. The declining vacancy rate has resulted in an above-inflation base rental growth which underpinned returns over the past year. In fact, the industrial sector was the leading performing sector for the year in returning 17.1% - ahead of retail and offices.

The declining vacancy rates have been supported by a combination of demand and supply factors. The last year saw a pullback in the construction of new industrial property, supporting occupancy rates and rentals. During 2013, around 950,000 square meters of industrial space was constructed

– 15% down from a year before. On the demand side, manufacturing production and industrial capacity utilisation has yet to reach the heights of 2007- implying that industrial space users aren’t yet in full expansion mode.

Historically, there’s been a 12-18 month lag from the time vacancy rates turn to when it reflects in the rate of rental growth – implying that the current downward trend in vacancies may only filter through to rental growth in the medium term. What is encouraging is that vacancy rate peaked at a lower level in the current cycle relative to the period 2000-’02. This resulted in rental growth remaining positive during the current cycle whereas it ventured into negative territory during the previous cycle.

overview

figure 3:manufacturing – volume Production (2005=100)

figure 5:manufacturing Production - growth % (y.y)

figure 4:industrial buildings comPleted

figure 6:industrial caPacity utilisation (%)

(million square meters)





On a segment level, Warehousing and Light Manufacturing recorded the lowest vacancy rates for the year ended December 2013 with 1.7% and 1.2% respectively. These two segments have been closely correlated since 2003. Vacancies among High tech industrials, the most defensive industrial segment through the cycle, remain low at 2.3% while Standard Units recorded the highest vacancy rate at 5.3%.

An interesting development over the past year is the increased vacancy rate among larger industrial units. Industrial properties larger than 25,000sqm recorded a vacancy rate of 5.7% while units smaller than 25,000sqm registered an average vacancy rate of less than 2%.

segmental Performance

figure 9:industrial vacancy rate and rental growth by size

figure 8:vacancy rate by segment as at dec 2013

figure 7:vacancy trend by segment





On a regional level, the lowest vacancy rate was recorded for the greater Cape Town area where an aggregate vacancy rate of 1.5% was recorded across 64 properties. Gauteng and KwaZulu Natal followed with vacancy rates of above 3.2% and 3.8% respectively. While vacancy rates in these two regions were higher than that of the Western Cape, there was significant divergence on a nodal level with vacancy rates ranging between 0% and 10% in both these regions. The graphic below illustrates this divergence.

Among the larger industrial areas, Pinetown was the best performer with a vacancy rate of below 2% and an average base rental growth of close to 8%.

In Gauteng, nodal selection played a key role in occupancy rates and rental growth during the year as several nodes recorded vacancy rates of below 4% while others such as Strijdom Park/Kya Sands and Alberton/Germiston recorded vacancy rates closer to 10%.

nodal Performance

figure 10:nodal Performance – 2013





figure 13:sPlit by key industrial area

figure 12:segmental sPlit

1. Sample compoSition

figure 11:regional sPlit

2. Regional

Segment Vacancy Rate (%) GLA (m2) Number of

PropertiesBase Rent

psqm/monthOperating Cost psqm/month

Johannesburg & Surroundings 3.9% 3,569,507 373 35.29 15.62

pretoria & Surroundings 3.2% 268,161 23 30.37 11.53

Durban & Surroundings 4.6% 572,015 60 36.34 16.08

Rest of Kwazulu-natal 1.7% 517,436 51 37.12 14.50

cape town & Surroundings 1.5% 741,973 64 34.30 11.95

3. inDuStRial SegmentS


PropertiesBase Rent


High tech industrials 2.5% 977,353 103 35.68 13.95

light manufacturing / low grade 1.3% 733,225 100 29.17 15.21

Standard units / Workshops 4.9% 2,395,818 243 35.20 16.62

Warehousing 2.8% 1,612,299 133 37.48 12.51





4. Key inDuStRial aReaS


PropertiesBase Rent


GAuteNG (JOhANNeSBuRG & SuRROuNdiNGS) 3.9% 3,569,507 373 35.29 15.62

midrand/Woodmead 2.4% 517,047 66 30.85 15.23

alberton/germiston 8.8% 485,101 35 29.31 11.35

Jet park 2.1% 389,306 45 42.94 14.27

m2 crown to cleveland/Denver 3.1% 385,321 28 28.09 16.63

Boksburg/Benoni/Springs 0.8% 296,252 16 29.49 12.23

Robertville/ormonde/industria 1.2% 242,669 22 29.41 14.24

isando 8.8% 228,417 23 36.61 15.84

Kempton park/Spartan 2.9% 186,333 28 47.81 17.37

Kramerville/Wynberg/Kelvin 3.8% 139,019 18 41.47 22.19

linbro park/modderfontein 0.0% 136,454 26 56.98 24.65

GAuteNG (PRetORiA & eNViRONS) 3.2% 268,161 23 30.37 11.53

pretoria West/Rosslyn 4.3% 111,310 7 27.87 15.58

centurion/Highveld 2.8% 85,916 7 39.33 6.43

KwAzuLu-NAtAL (duRBAN & eNViRONS) 4.6% 572,015 60 36.34 16.08

Durban north/phoenix/Riverhorse 8.3% 227,402 35 35.52 13.54

umbilo/mobeni/Westridge 0.8% 208,812 14 37.75 22.57

the Bluff/airport/isipingo 4.4% 135,801 11 35.41 9.81

KwAzuLu-NAtAL (ReSt Of KwAzuLu-NAtAL) 1.7% 517,436 51 37.12 14.50

pinetown 1.8% 492,642 46 36.86 14.86

weSteRN CAPe (CAPe tOwN & eNViRONS) 1.5% 741,973 64 34.30 11.95

epping/airport/maitland 2.2% 331,093 35 27.64 14.59

montague gardens/paarden eiland 0.6% 223,600 15 41.76 8.57

goodwood/parow/Bellville 1.3% 155,936 10 36.29 9.83

gloSSaRy

WaReHouSing

Warehousing eaves height greater than 6 metres with good circulation and docking space and multiple access portals

HigH-tecH/HigH gRaDe inDuStRialS aRe incluSive of:

High-tech industrial modern construction with office content between 25% - 50% of the gross market rental.

High grade industrial eaves height greater than 6 metres with good yard/circulation space

ligHt manufactuRing

light manufacturing office content less than 15% of market rental. eaves height <6m or limited yard/circulation space or restricted accessibility.

StanDaRD unitS aRe incluSive of:

mini units modular units with a majority of rentable areas being less than 500 m2 per unit

midi units modular units with a majority of rentable areas being between 500 and 1000m2 per unit.

maxi units modular units with a majority of rentable areas being greater than 1000m2 per unit.

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IndustrialVacancy - SAPOA · iuri SurVe rerT 2013: full year 2013 Sapoa cont act Det ailS t 011 883...

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