The past twelve months – which saw a global pandemic and a multiple-month lockdown across South Africa – have been memorable to say the least.
As Cape Town’s economy returns to normal and starts to churn again, two sectors of the property market are delivering high occupancy rates and renewed interest from tenants: light industrial microspaces and e-commerce facilities.
Here are some of the latest figures to bear in mind as we seek to understand this positive development and just how industrial and e-commerce property are shining a light on the industry.
Small and agile properties in demand
The latest numbers from Inospace paint a positive picture of the light industrial property market, with a 5% vacancy rate being reported for micro-spaces in particular.
Despite the serious shock to the economy in the wake of COVID-19 these properties report a 90% customer retention rate. This could be due to the growing trend for flexible lease agreements and effective negotiations between owners and tenants via reputable agents.
Warehousing and order fulfilment spaces are becoming increasingly popular as e-commerce offers consumers a safer way to shop while maintaining social distance. Demand for this type of commercial property is likely to persist into 2021 and beyond as consumers switch to online shopping by habit.
Behind the numbers: economic recovery on the horizon
Low vacancies and an apparent surge in new tenant activity are not usually what you’d associate with a recession and global pandemic – and these numbers indicate a positive turnaround in Cape Town’s local economy.
- Vacancies spiked initially in the wake of SA’s nationwide lockdown as businesses that couldn’t stay afloat took the painful decision to close down.
- At this stage, the current pool of tenants – especially those enquiring about commercial property rentals going into 2021 – is largely comprised of businesses that have weathered the Covid storm.
- With stable tenants that are adapted to the new normal and have favourable growth prospects, property owners can look forward to timely rent payments and may be more likely to take a flexible approach to lease negotiations.
These factors bode well for the light industrial property market going forward – and several areas of the Mother City are already reporting excellent occupancy rates.
Cape Town’s lowest-vacancy commercial spots
The nationwide trend toward micro-units and online retail premises is especially strong in several areas of the Mother City. The properties in these districts saw initial vacancy spikes early in the coronavirus pandemic but have since settled as the economy slowly returns to normal.
The northern suburbs (which are home to many industrial areas) are doing especially well in terms of vacancies
Paarden Eiland and the Bellville triangle are currently at 99% occupancy rates with almost 30% of new tenants originating in the ecommerce sector. If this trend continues, rentals in the north of the city could start to climb significantly next year.
Looking for an industrial property in Cape Town? Look no further
If you’re in the market to rent a small, flexible industrial space now may be the perfect time to secure a favourable monthly rental and contractual terms. Contact the Commercial Space team today to discuss your specific requirements.