The Industrial Property Clock ticks along in 2104. We last had a look at the property clock in the context of industrial property in May 2013. Where are we headed in 2014?
This year we are faced with more industrial action, a weakened Rand, a general election and slow GDP growth. Europe and the US are continuing a slow recovery and there is a possibility of interest rate increases in the not too distant future.
On the ground, we are experiencing a short supply of industrial investment and owner occupier properties and Industrial vacancies are also slowly falling. Industrial Rentals are showing signs of breaking out of their sideways movement. Whilst still being extremely cautious, banks will fund good projects backed by good clients.
Land for sale is also in short supply and there are a number of turn key developments for owner occupier and large tenants on the drawing board. Older but well positioned areas such as Epping in Cape Town are experiencing rejuvenation with older buildings been demolished and being replaced by modern industrial warehouse facilities.
So the question we are again asking is where are we placed in terms of the property cycle with more particular reference to the property clock ? In May last year, we felt that we were in the 7-8 O’clock range. We now believe that we are now edging between 8-9pm.
Our advice for 2014 will be to position your industrial property portfolio for growth. Look at renovating buildings, replacing tenants that are bad payers, acquiring land if possible or properties that can be recycled and value added. If you are looking for increased funding in future, make sure your house is in order, your financial statements up to date and your leases checked so that all leases, resolutions, and sureties are correctly signed as the banks will ask for everything and will check all your documents comprehensively.
Guy de la Porte is Cape Town’s Industrial Property specialist.