E-commerce will drive warehousing demand

The warehousing sector appears to be one of the star performers for the property sector in South Africa. The South African Property Owners’ Association (Sapoa) has reported that the industrial sector has outperformed both office and retail with regard to the vacancy rate, closing 2018 at 3.6%. While this does represent a downward trend from 5.2% in 2016 and remains below the long-term average of 4.3%, slower economic growth and decelerating household consumption have been cited as challenges which have created some apprehension in the market. “However, the move towards more flexible lease terms has created some room for speculative developments in the market,” said JLL Sub-Saharan Africa research analyst Omphile Ramokhoase. “Logistics has also seen improving rental rates as a result of improved technology and increased efficiency in space utilisation. Demand for these higher-end developments remains a key contributor to growing stock in the sector.” She said South Africa’s position as a gateway into other African markets continued to hold significant potential, positively affecting the warehousing and logistics markets overall. “Improving infrastructure and logistics services in neighbouring countries are likely to drive demand for South African port activity, contributing to greater demand for warehousing and logistics space,” she said. According to Ramokhoase the potential for growth in the industrial sector is considered high. “On average the industrial sector sees the addition of 1 million sqm of accommodation per annum. This highlights the confidence that developers have in the sector and the steady demand for industrial accommodation. The growth of e-commerce, online shopping and retail warehousing will be key drivers of demand for warehousing space,” she said