Cape Town’s Industrial Sector: A Comprehensive Overview of Opportunities

Cape Town may be famous for its luxury residences and premier commercial space, but the city’s industrial sector is giving other industries a run for their money this year. In a highly volatile and ever-evolving property landscape, Cape Town’s industrial sector has proven to be greatly resilient.

Rentals in the industrial sector expanded by 6% in 2023, fueled by major investment in the Cape Town metro and continued investor confidence in the city as a destination where services are delivered, business can be done securely, and the future looks bright.

In this article we take a deep dive and explore the success of Cape Town’s industrial sector based on the latest data and highlight some of the commercial property investment and rental opportunities that are emerging for clients in the logistics, light industrial, and warehousing sectors.

Cape Town industrial sector expands as the local economy flexes its muscles

Factories and industrial parks may not be the first thing that comes to mind when most people visit Cape Town, but in reality, the city is home to a thriving industrial sector which supports and underpins other areas of the economy, including retail, tourism, and services.

As more people move to the city and invest in other sectors, the demand for goods is increasing rapidly. As a result, modern industrial spaces within convenient driving and delivery distance from the CBD and suburban areas are in high demand.

The following insights from the Rode report of Q3, 2023 shows how rapidly the industrial sector is expanding.

The industrial property sector has grown by 6% over the past year and 7% the year before.
This impressive performance is driven by the expanding population of Cape Town, which is projected to reach 5 million by 2030.

As the industrial sector grows, companies are struggling to find premises in a city that’s constrained by its geographic features. Nestled between the Atlantic ocean and table mountain, Cape Town has limited space for industrial development, especially given the high cost of premium residential and commercial land in the city.

As a result, industrial areas like the West Coast, Atlantis, Airport Industria and traditional light industrial zones like Epping are experiencing growth and redevelopment on a scale last seen decades ago.

Much like the trends of the workplace and office space sector which features an undersupply of units and an oversupply of tenants, industrial properties are in high demand with developers scrambling to build new stock to meet it.

What industries are driving CT’s industrial boom?

Cape Town is well known as a popular tourist destination, attack hub, and a location for filming scenes that require both natural beauty and a vibrant urban environment. But with all the glamour of tourism in the film industry, the industrial sector is often forgotten.

What some businesspeople, even lifelong Capetonians, don’t realise is that the city is home to a large and expanding industrial sector. Some of the notable contributors to the sector include:

The shipbuilding industry

The second largest in the country, Cape Town is home to a vibrant shipbuilding sector which not only constructs new vessels, but also repairs tankers, cargo ships and cruise vessels during the off-season in Europe.
These businesses require a variety of parts and spares, as well as warehousing facilities in close proximity to the waterfront area.

Trucking and logistics

Johannesburg may have a strong reputation for logistics, but as the road network deteriorates in the northern part of the country, Cape Town based trucking companies and distributors are attracting more business.
The Western Cape’s infrastructure is causing businesses to take strategic decisions that benefit the province over others – and this further drives up the demand for industrial property in the future.

Secure warehousing

South Africans are embracing e-commerce and home delivery for everything from fast food to groceries and appliances, and this trend is set to explode in 2024 as Amazon finally launches its local service offering.
With a huge inventory of goods soon to be kept on hand by the worlds biggest online retailer, and given that Amazon chose to headquarter itself in Cape Town, there’s likely to be a surge in demand for warehousing and order fulfillment premises going forward.

Opportunities to buy prime industrial property remain rare – but they do exist

Cape Town faces a paradox of high demand and low supply, and this means in practical terms that both commercial and industrial space tenants and investors are scrambling to secure premises throughout the city.

Recently, the news that the City of Cape Town is auctioning a 99 year lease on a jewel of a premises in the foreshore – directly opposite the Cape Town International Convention Center – had the commercial property industry abuzz.

The land, which is located in one of the most sought after and fast developing regions of the city, is expected to fetch R1 billion on auction when it goes under the hammer on March 27.

Land earmarked for development in the city has become rare, and it’s anyone’s guess who the property may be leased by for the next 99 years, what they’ll develop on the premises, or whether it turns out to be industrial or commercial. Still, there’s no doubt that the new owner will be set to gain tremendously from the location and share size of the property for the foreseeable future.

Premises that make headlines aren’t the only way to invest in industrial property in Cape Town. Let’s take a look at some of the benefits of investing, whether you buy a single unit or an entire development.

The benefits of owning Cape Town industrial property

This article began with some impressive figures outlining the demand for industrial property in the Mother city. With commercial real estate tied to the local economy which is expanding at a rapid tick and being the only major metro to see its city centre improve and service delivery remain constant over the years, the surge of skilled migrants from other provinces, and also overseas will only increase in the years to come.

From a property investment point of view, more people equals more demand for goods and services, and those goods need to be stored and transported. That’s where industrial property comes in.

In addition, the popularity of delivery services, especially for the city’s retired population, which is growing as wealthy families relocate, could have an increasingly strong positive effect on the industrial property sector.

With demand continuing to rise, rentals in the industrial property sector have been following suit. This is excellent news for industrial property owners as their return on investment is likely to increase by year as well as the capital value of the investment.

Until the happy union of appreciation and high rental returns make industrial property the most extremely attractive option – especially given that it’s average price per square meters level and that of office space- a few good deals will remain in the market for savvy buyers.

Cape Town is the ideal place to invest in property – and now is the ideal time

As the fastest growing metro area in terms of rentals and one of the country’s most developed, Cape Town is here to stay.

If you’re in the market for an industrial property rental, our team has decades of experience to share with you as we search for your ideal property together. Contact us today to schedule a viewing.