Improvon, a specialist warehousing and logistics property developer, has opened Dakota Precinct, a R1.3bn logistics park near Rand Airport in Germiston, Ekurhuleni, in collaboration with Nedbank Property Partners. They hope to take advantage of the positive outlook for the logistics and distribution sectors.
Project financier Nedbank has also taken a 35% stake in the project, with Improvon owning the balance.
The development comes at a time when supply chain backlogs and port delays as a result of Covid-19 shutdowns are placing significant pressure on economies globally.
With container costs reportedly four times higher than before the Covid shutdown, supply chain disruptions moving inland and a rapidly growing domestic e-commerce market, significant investment in new infrastructure is required to meet increasing demand, said Improvon CEO Stefano Contardo.
“In light of current supply chain constraints, Dakota Precinct offers an ideal strategic location for specialist manufacturers, assembly plants, processing factories, FMCG [fast-moving consumer goods] retailers and third-party logistics providers,” said Contardo.
The total development, which covers 250,000m2 of land, will be developed in five phases and offer 130,000m2 of gross lettable area of A-grade logistics and warehouse facilities. The entire project is due for completion in five years.
Phase one of Dakota Precinct is expected to be completed in September 2022 and will offer 7,600m2.
Dakota Precinct has easy access to the N17, the N3 and the R21, positioning it as a gateway to Johannesburg and Tshwane from KwaZulu-Natal.
Most logistics and freight-forwarding companies will use this node to break bulk and from there ship it to Tshwane, the East Rand and the rest of Johannesburg,
Contardo said the logistics and warehousing sectors were least affected by the Covid-19 pandemic and the company is upbeat about their outlook.
Improvon is a R9bn property investment company focused on the warehousing and logistics property sectors in SA, Zambia and Kenya.
Jones Lang LaSalle (JLL) SA, a global listed real estate company, said the stellar industrial property performance over the last two years has been driven by the logistics sector. Rentals levels are considered the most stable and “future-proof”. However, this positive sentiment is concentrated within the logistics and distribution sectors.
“In strategic nodes with accessibility and connectivity to key transport infrastructure, there is evidence of demand, especially given the boom in e-commerce resulting from the pandemic,” said Mieke Purnell, a research manager at JLL.
Braydon Aab, Broll Gauteng’s head of industrial broking, believes the Rand Airport commercial park is the future of logistics in Gauteng due to its location and accessibility.
“Gosforth Park, located close to this node, set a new standard in logistics facilities, attracting a number of users, and with this new development is competition to the Midrand/Centurion industrial nodes.”
Aab said well-located industrial areas in Ekurhuleni continue to experience demand, especially for facilities measuring 5,000m2 to 15,000m2.
Facilities at Dakota Precinct vary in size, with mini-units ranging from 1,000m and with plans to build facilities measuring about 20,000m2.
Mark Truscott, head of leasing at Improvon, said the mini-units will be developed first, followed by those of 5,000m2 to 20,000m2. “Strong demand for logistics and warehousing facilities is for units measuring 5,000m2 to 30,000m2. We think that the market will continue to grow and remain robust,” he said.
Dakota Precinct is targeting net rentals of between R60/m2 and R65/m2.
Purnell said asking net rentals for high-quality logistics properties vary depending on the node, with reasonable rentals of about R65m2 to R72/m2.
“Rentals for tenant-driven new stock is commonly determined as a function of construction costs and therefore rates for this type of stock are expectedly higher than older stock,” she said.
Publication: Business Day
