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North Durban emerging as industrial hotspot

North Durban emerging as industrial hotspot

Date: 2013-01-23
Land scarcity plagues industrial property prospects in Durban South

Durban, 21 January 2013: The Northern Industrial Suburbs, a cluster of Springfield Park, Riverhorse Valley, Briardene and Mount Edgecombe areas is fast emerging as an industrial hotspot in Durban. The area is showing tremendous growth potential in terms of industrial property as most of the South Durban Basin is oversaturated with no new land available for development.

North Durban is squarely on the radar for companies looking for warehousing facilities and container yards.The area has natural advantages - a huge labour base in nearby areas of KwaMashu and Phoenix coupled with good connectivity as the R102, N3 and N2 flow through it. Moreover the North Industrial Suburbs lie within 25km radius of both the King Shaka International Airport and the port & container terminals at Bayhead.

Industrial real estate in proximity to transportation hubs generally tends to outperform the broader market. Also the proximity to national road network makes inland hubs desirable.

The confidence in these suburbs is reflected by the asking rents for industrial space, currently at just below R50/ m? except for Riverhorse Valley Business Estate which commands R58 / m?. They are likely to go up further in 2013 as demand continues to outpace supply.

Just over five years back Tongaat Hulett sold all the available land at R1000 / m?, the same land now sells at R1600 / m?. Despite the 60% premium, the demand continues to remain high with vacancies under 1%.

The North is slowly charting its own growth story. Springfield Park, Riverhorse Valley and Briardene has largely been home to industrial and mixed use buildings varying from the older multi story warehouses along the North Coast Road to brand new developments like the Mr Price and RTT warehouses. Zenprop recently completed the state-of-the-art Mass Discounters warehouse in the heart of the Riverhorse Valley overlooking the N2 and Stefcon Projects has developed a new facility for Camjet.

Despite the tightness of the market, demand for industrial property in Mount Edgecombe has also picked up tremendously. As the airport moved North, the South has shrunk in significance and coupled with scarcity of new land for development, the North is experiencing 100% growth in property values.

New developments in the area include the relocation of Altech UEC to the old Trade Centre retail warehouse on the R102. Zenprop recently purchased 44000m? of prime land on Marshall Drive and is in talks with a national chain for a 33 000m? distribution facility.

According to Anthon van Weers, Senior Industrial Broker at Broll Property Group, "North Durban is fast emerging as a hub for industrial and warehousing facilities due to its proximity to the port, airport and the national road network. This part of Durban is seeing significant infrastructure development compared to the South where developers are citing several reasons for the lack of quality industrial development mostly attributable to non-availability of large parcels of land."

He further adds, "The North has a huge land bank, so large projects can be put up. We are seeing increased interest in inland warehouses and distribution centres connected to sea and airports. This growing trend will help companies reduce costs and create new opportunities for developers and investors in the industrial real estate sector."