Inospace acquires 44th logistics park in Montague Gardens
Inospace, South Africa’s largest owner of serviced logistics parks, has acquired its 44th property in Montague Gardens, Cape Town.
Inospace has announced that it had concluded an agreement to acquire Creation Park, from a private property fund, for R119million. The industrial-zoned park is a modern 15,490 square metre multi-let property situated at the entrance to Century City.
Inospace’s assets are now worth around R2,5billion, after its recent announcement of a R1,25billion transaction with Fortress REIT, which injected R640million into the company’s niched property platform.
Creation Park, soon to be renamed Creation Works, will be repositioned into a last-mile delivery logistics park. The property, situated on 26,298 square metres of land, has 38 units and is let to 28 businesses. It will be repositioned, rebranded, refurbished, and fully serviced with additional value-added products. It will then be integrated into the company's network.
Inospace focuses on premium industrial and logistics distribution parks, let to small and mid-sized grade tenants on short-term flexible leases, in proven logistics nodes and built to institutional specifications.
Many of the parks’ tenants have been in the park for over five years and operate in the last-mile logistics and distribution category. Tenants include national operations such as Krost Shelving, PNA Stationary, Foodserv Solutions and Rebel Safety Gear.
Cape Town Regional Director, Jacques Weber, says the acquisition has enhanced the group’s strong Cape Town urban portfolio. “Creation Park is a strong asset located in a key urban location 15km from both central Cape Town and Tyger Valley. It is a perfect suburb for last-mile delivery and an area we have been trying to enter for two years” explains Weber.
The transaction has been financed through a mix of cash and bank debt, provided by Grindrod Bank which is expanding its Property Finance Business in the Western Cape.
“Inospace has built a high-quality portfolio, consisting of properties with increasing income returns over the medium term,” says Grindrod Bank, Property Finance’s Sven Koenig. “This is the type of entrepreneurial client that we are looking to grow within the Western Cape”.
Inospace has seen significant demand for its unique combination of warehouse, storage, and workspace over the last twelve months.
Throughout 2021, strong e-commerce sales combined with supply chain challenges fuelled demand for space in the industrial sector, especially for warehouse and logistics spaces.
And this demand continues to outpace supply. The national vacancy rate for industrial property now stands in the low single-digit percentages.
With supply chain bottlenecks and rising transportation costs, there’s an increased push toward building resilience. As a result, companies are switching from a just-in-time inventory to a just-in-case supply chain strategy, pushing up the need for industrial and logistics space.
Although the logistics sector is working toward becoming resilient against supply chain disruptions, this is not yet reflected in leasing practices across the board as companies focus on immediate inventory challenges, which includes on-demand warehousing Inospace reported.
Forced by surges in ‘stock supply’ many businesses have often pivoted to on-demand warehousing to secure space to suit their immediate needs. This is a market that Inospace has filled with its range of logistics, warehousing and last-mile delivery spaces.
“There is no doubt that short-term warehouse solutions are filling a much-needed gap in the market, especially when businesses are trying to deal with the immediate effects of the pandemic in China and other supply chain crises. Industrial and logistics property fundamentals are expected to stay robust in the next several years.” concludes Weber. “Creation Works will offer a healthy mix of warehousing, storage, and last-mile logistics space to businesses."