Inospace acquires two last-mile logistics assets in Cape Town

Located in Airport Industria – across the road from the airport and less than 20km from Cape Town CBD – Sky Park and Alkin Park properties are fully let to 12 logistics, warehousing and/or light-manufacturing tenants.

The parks, jointly measuring 16,118m2, will be rebranded and renamed Sky Works and Fly Works, and will be integrated into Inospace's growing network of sites.

“This well-located asset acquired on an attractive forward yield of 12% is in a node where our data shows extremely high tenant demand,” says Inospace Chief Investment Officer, David Bernstein.

Bernstein says Inospace has continued to grow despite interest rate headwinds. Since the beginning of the year, Inospace has acquired close to 200,000m2 of industrial park across 16 assets in Cape Town and Johannesburg.

“While we are cautious about rising interest rates, we remain focused on our growth strategy. We are now finding it easier to acquire higher-quality assets at more aggressive yields,” he says.

Valuations have cooled down over the last two months – this as interest rate hikes and load shedding have taken their toll on acquisition yields and investor sentiment.

“If we continue purchasing well-let quality properties at prices between 50% and 60% below replacement value, we will remain one of the few locally focused high-growth property groups.”

Bernstein says they remain positive about the long-term outlook for the last-mile logistics sector. At the same time, they remain conscious of negative risk factors, such as load-shedding, inflation and the concerning interest rate outlook.

“We see growth opportunities in a contracting economy and, while the airport may well be the exit point for many investors, we see it as the entry point for untapped investment opportunities,” says Bernstein.

Growing demand

The demand for small-format logistics and industrial spaces continues unabated with Inospace annual rental growth now in double digits – keeping ahead of inflation, says Jacques Weber, Inospace Chief Operating Officer.  

“Smaller industrial and last-mile logistics assets have been insulated from local and global economic shocks due to growing demand for smaller-format logistics warehouses and distribution centres. Coupled with e-commerce growth, the industrial property sector has outperformed other commercial property segments,” says Inospace Chief Operating Officer, Jacques Weber.

Weber explains that Inospace owns five parks measuring 60,000m2 of lettable space near OR Tambo International Airport in Gauteng. Inospace has been looking for suitable sites to service the Cape Town Airport node for some time now.

“Our properties are situated near airports, transport hubs or harbours as these are highly desirable strategic locations for logistics real estate,” according to Weber.

Airport Industria is a bustling business node that has grown in the last decade, mainly due to the surge in travellers and goods coming through Cape Town International Airport. About 49,159 more domestic travellers passed through the airport in July than in June this year, according to the latest figures from tourism agency Wesgro July Report.

In Cape Town’s airport node, Atterbury Property owns large tracts of developable industrial land that enjoy high demand because many companies opt to develop large distribution centres in this location.

Fashion retailer Truworths, in partnership with Atterbury, is building a new R900 million Western Cape distribution centre in the nearby King Air Industria Park, an Atterbury Property and Old Mutual Properties development.

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