Sales values of industrial properties in Durban’s strategically located Northern Corridor, which extends from the Umgeni area through to Cornubia, have since the start of 2023 experienced a substantial increase, with increased prices indicative of a stock shortage, according to Swindon Property.
North-Durban corridor market activity
“Over the past six to eight months, this North-Durban corridor has seen a spike in the value of sales on a rand per square metre basis. For example, in Riverhorse Valley, this has risen by 10% over the past four to six months alone. In Q1 of 2021, values here stood at around R8 500 per square metre to a maximum of R10 000, while currently, the maximum range is up to R12 000 per square metre, with most sales concluding around the R11 000 per square metre mark,” says Mike van Schoor, KwaZulu-Natal director for Swindon Property.
“Similarly, other areas in this node between Springfield Park and Glen Anil have seen some sales being concluded at levels that are setting new benchmarks. There is very little stock available for sale. Although sales are being concluded, the demand to acquire industrial property outstrips supply, so until there is an equilibrium between current market prices and new development prices – which are considered to be up to 30% higher – new properties won’t be built, making this a seller’s market.”
“Rental prices have experienced similar improvements, although, as with sales, different areas command different price points. The overall increase in rental, no matter the area, is, however, quite evident, with rental inflation averaging between 20% and 25% since 2021.”
“This hub, which comprises predominantly general to light industrial property, has been a growth node for industrial and commercial space for many years due to the fact that the South Basin – including Congella, Clairwood, Mobeni, Jacobs and Prospecton, is almost entirely built up with very little development land available,” says Winston Sjouerman, head of Industrial Brokering for Swindon Property in KZN.
“There is, however, a general lack of stock in KwaZulu-Natal across the board, from industrial to office space. Westway Office Park, which has encountered challenges over the past few years, has seen several lease transactions concluded, while uMhlanga, which had numerous vacancies post-Covid, has enjoyed a considerable space uptake, with the vacancy square meterage being reduced by over half.
“The demand for large warehousing and logistics-friendly properties has soared post-lockdown, placing Durban and the Harbour in the spotlight. The upgrading of the port of Durban remains on the cards, with tenders having closed in February this year 2023, although construction work has yet to begin.”
Sjouerman says that two years on from the lockdown period, demand for industrial property remains strong and continues to escalate to the extent that the asking prices of rentals as well as sales have increased significantly.
“A contributing factor has been the dearth of new development during the lockdown, with the latter fuelling a trend towards distribution and logistics-type businesses. Due to their central location, Springfield Park, Briardene, and Riverhorse Valley remain the most popular industrial areas in Durban and, along with nearby Red Hill and Glen Anil, have generally commanded strong interest not only in respect of leasing but also in sales. Notable recent sales by Swindon Property include a 1,094sqm unit purchased for R10.4 million by an end-user, a 1,155sqm building in Glen Anil sold for R9.6 million also to an owner-occupier, and a mini-factory complex in Briardene acquired for R18 million by an investor. Industrial lease transactions concluded by Swindon Property include 1,150sqm in Briardene let on a four-years lease to a logistics company, 1,808sqm in Briardene let on a three-years lease, and 2,600sqm in Briardene with a 3,5-years let.”
“The surge in demand has been a significant drawcard for large distribution-type end-users and has proven a catalyst for a demand-driven push from various developers to complete planned big-box developments sooner rather than later. This, in turn, has created more demand for smaller industrial spaces for businesses that support or provide products and services to larger end-users. In a similar vein, Pinetown and the Westmead/Maxmead industrial areas are also quite densely populated with largely standalone, or midi to maxi-sized warehouses in secure complexes,” adds van Schoor.
According to FNB Property Sector Strategist John Loos, only the industrial market is perceived as having demand that exceeds supply, with eThekwini listed as one of three coastal metros where the market strength lies in industrial property.
For further information, contact Swindon Property on 021 422 0778 or visit www.swindon.co.za.
Writer: Gaye de Villiers