Justin Thom
Galetti Corporate Real Estate
Director
The industrial property sector was highly publicised as a resilient contender in 2020 when e-commerce peaked.
However, unknown by some, this asset class has been steadily making its way up the ladder for decades, primarily driven by demand from the country’s manufacturing and logistics sectors.
Both these sectors have experienced their fair share of highs and lows, but a boost in economic performance, coupled with increased investment in the second half of the year, may bode well for a stellar performance in 2025.
The growth of the industrial property sector hinges on the growth of some of the country’s key sectors and all-importantly, the growth of e-commerce.
The latest Rode Report (Q3:24) highlighted continued growth in the sector with vacancies of just 3.6%, well below the long-term average of 4.2%. It also highlighted rental growth of 6.9% year-on-year for industrial units, 500m² units for example, with larger spaces (1,000m²) experiencing an even higher increase of 7.4%
Industrial properties are relatively inexpensive to maintain and run compared to other asset classes like retail. They’re viewed as a stable asset class that offers higher returns, and in terms of location, they’re often centrally located near to major transport routes and networks.
Regional leasing trends in 2025
Gauteng’s industrial property sector will see improved demand in 2025. With everyone formally returning to work, we are seeing increased enquiries for industrial premises.
This market also offers more value for money with Johannesburg’s industrial property rentals typically ranging from R65 to R95 per m².”
And while there is very little industrial space in the Western Cape, there will be high demand in 2025.
The Western Cape continues to attract businesses seeking well-maintained infrastructure and access to global markets via the Port of Cape Town. Demand for industrial property in regions like Bellville, Montague Gardens and Epping is likely to remain strong, particularly from sectors focused on exports, however finding space remains a key challenge for many businesses looking to set up shop.
Despite its infrastructure challenges, KwaZulu-Natal may be of interest to many of the country’s large manufacturers who are still prominent in the region—Durban’s role as a significant port city positions it as a key area for industrial leasing. Many suppliers to the big manufacturers also want to be close by to ensure swift service and delivery.
General trends shaping the industrial leasing landscape
Is this the year of smart technology? Depending on budget, companies (particularly multinationals) increasingly seek technologically advanced facilities that optimise supply chain operations. Features such as automated systems, energy-efficient designs and real-time inventory tracking capabilities are slowly gaining traction locally.
Smaller footprints and flexible spaces. With the rise of just-in-time logistics, businesses seek smaller, more flexible, strategically located facilities closer to urban centres to meet faster delivery demands.
Is sustainability a thing? Green Star buildings are becoming more popular, reflecting a shift towards sustainability in the sector. However, we still have a long way to go.
One of the clear trends has been the adoption of solar power, water tanks and waste-management systems. Landlords have installed alternative solutions in industrial buildings to help secure and retain tenants.
Custom-built facilities Known for their sheer size and expansive nature, industrial properties lend themselves to custom fit-outs. Landlords looking to attract tenants in 2025 may opt to customise their facilities.
But 2025 won’t be without its challenges, which also present hurdles in 2025, such as infrastructure challenges, municipal service delivery, unions, potential strikes, and barriers linked to security, safety, and regional disparity.
For landlords and developers, success in 2025 will depend on understanding (and delivering on) tenants’ needs. On the other hand, tenants will need to weigh up costs, location and infrastructure capabilities carefully to secure spaces that align with their strategic goals.