Industrial VS commercial: which has performed better leading towards the end of 2024?
Category Commercial and Industrial News
As we rocket towards the end of another year, stakeholders in every industry are putting together data about how their industry has performed over the last calendar year. As a business with strong ties to both commercial and industrial property, 3Cube Property Solutions has put together an analysis of how both sectors have fared in 2024. As it turns out, it's tough to say which has performed better this year, because there have been significant wins in both sectors, but it's arguable that industrial property holds onto the upper hand. Let's dive in.
Supply levels lower than demand levels in the industrial property sector
Property Wheel reminds us that the industrial property market's demand has been stronger than supply since the beginning of 2022, when businesses started to recover from the pandemic. As of July, the average time on the market for occupied industrial properties was 13.48 weeks quicker than office space's 24.5 weeks. Additionally, vacant industrial properties were also on the market for shorter periods than office space: 14.24 weeks compared to office space's 25.19 weeks.
As early as the first quarter of 2024, the Rode's Report on the South African Property Market revealed that the industrial property market was boasting low vacancies and strong rental growth. The report revealed that Cape Town, in particular, was booming and that Durban was also showing robust growth. As is the case with residential property in certain parts of Cape Town, "rental wars" have been waged around industrial properties, with multiple companies vying for the limited spaces available.
An article penned by Broll Auctions and Sales for BusinessTech reminds us that the demand for well-located warehousing keeps the vacancy rate in South Africa's largest metros (Johannesburg, Cape Town and Durban) at almost zero. Despite challenges posed by macroeconomic factors, industrial property owners are continuing to enjoy above-inflationary rental growth across the board. The accelerated uptake of online shopping around the country continues to drive demand for suitable warehousing.
Interestingly, stats from Q3 2024 show eThekwini recording the strongest activity ratings, followed by Nelson Mandela Bay. Cape Town came in third place followed closely by Johannesburg, with Tshwane showing weaker sales activity.
Glimmers of hope shining in the commercial real estate space
As far back as 2023, the resourcefulness and innovation being shown by commercial landlords in Cape Town were bearing fruit. By late 2023, Cape Town was recording the country's lowest office vacancy rate and the Mother City's popularity is continuing to rise as a result of factors like good governance and well-maintained infrastructure.
To see proof of the resilience of South Africa's commercial property industry, look no further than the Mother City. Business Live reports that in the two years leading up to June 2024, Cape Town's office vacancy rate has more than halved. This brings the vacancy rate to 6.3% - the lowest it has been since 2009.
BizCommunity reminds us that South Africa is proudly home to the largest commercial real estate industry on the continent. This umbrella encompasses both commercial and industrial real estate, as well as retail space, but it is worth taking to heart across both sectors that further exponential growth is possible. If stability reigns in key metros and interest rates continue to decrease (as is predicted for 2025), we can look forward to a long-awaited commercial property boom.
The need for commercial and industrial property remains robust - for every business from a growing startup to a multinational conglomerate. 3Cube Property Solutions has spent decades analysing businesses' property needs and matching businesses with premises that will facilitate their growth. Contact us if you need a home for your business in Gauteng or the Western Cape.
Author: 3Cube Property Solutions
