Inospace rides e-commerce boom, warns of stormier second half

Cape Town-based logistics platform Inospace has reported robust half-year results for the six months ending 30 June 2025, underscoring continued demand for last-mile logistics, co-warehousing, and micro-industrial space.

As South Africa’s largest owner and operator of last-mile logistics parks, Inospace grew revenue by 12% year-on-year and recorded double-digit growth in net operating income, driven by tenant demand, strong retention, and ongoing expansion.

Occupancy across the group’s R3-billion portfolio ended the half at 92%, with many parks in key logistics corridors running at full capacity. The company signed 142 new leases in the second quarter alone, over three-quarters of which were taken up by existing tenants either expanding or renewing.

“We’ve built our model around speed, flexibility and client success,” said CEO Rael Levitt. “The traditional landlord model doesn’t work for SMEs that need to move fast or downsize quickly. We’ve proven that doing more than just renting out space helps our clients grow and when they grow, so do we.”

That model blends warehousing, storage, and logistics services in a single ecosystem. It’s become increasingly attractive to SMEs, e-commerce sellers, and last-mile distributors seeking convenience and cost-efficiency without the red tape of traditional leasing.

But Levitt warns that the road ahead may be bumpier. “South Africa’s small businesses are navigating an increasingly volatile environment,” he said. “Operational costs are rising, and global trade disruptions are beginning to impact our client base. We’re well-positioned, but we’re watching these headwinds closely.”

Despite these challenges, Inospace has made key operational gains. One major move was the outsourcing of facilities management across its portfolio. This allowed the business to streamline operations, reduce costs, and reallocate internal resources toward core client service. Results suggest that this shift has improved satisfaction while boosting margins.

Financial operations were also strengthened. Improved credit controls have enhanced collections, while a new “One Bill” system, rolling out in Q3, aims to tackle a long-standing pain point in multi-let industrial real estate: billing complexity. The new system consolidates all monthly charges into a single, transparent invoice. Levitt said this will simplify budgeting and cash flow visibility for clients and the company alike.

Technology remains central to Inospace’s operating model. A new client onboarding platform now manages move-ins and move-outs. “Lisa”, the company’s proprietary technology platform, was retooled to focus on deal flow and client retention. In parallel, a new asset management platform is being rolled out across the group’s co-warehousing and storage portfolio, offering better tracking, visibility, and operational control.

“These platforms aren’t tech for tech’s sake,” said Levitt. “They reduce admin and allow us to deliver better service, faster.”

Inospace’s growth strategy is also being underpinned by capital recycling. Over R320 million in mature assets were disposed of in the past six months, including the sale of Jet Works in Jet Park, parts of Wynberg Workshops in Sandton, and industrial assets in Paarden Eiland and Parow. The company also sold out five sectional-title developments. The Cape Town disposals fetched nearly R10,000 per square metre on average, giving the group a substantial cash pile to fund acquisitions in high-demand areas.

Four new parks are being launched in Cape Town, including sites in Woodstock, Epping Industria, Cape Town CBD, and Capricorn Works in Muizenberg. The group has also confirmed three more acquisitions are under contract, with details to follow in the second half.

Inospace’s leadership team has evolved alongside its growth. Recent appointments include Llewellyn Olivier as Chief Financial Officer and David Bernstein as Group Managing Director. To support its growing fulfilment and courier aggregation offering, the company has brought on logistics veteran Devan Cairns, currently heading fulfilment at JSE-listed HomeChoice, to lead the rollout nationally.

Meanwhile, product innovation continues. A co-warehousing model launched at Olympia Works in Sandton now offers micro-warehouse suites that blend the flexibility of coworking with logistics infrastructure. Designed for e-commerce sellers, light distributors and online retailers, the offering targets businesses that were once priced out of traditional warehouse space.

Yet even with strong fundamentals, Levitt remains clear-eyed about the macroeconomic picture. Local SMEs face multiple pressures, from surging energy costs and fuel prices to the potential loss of US trade privileges. Some are already pivoting toward African markets under the African Continental Free Trade Area (AfCFTA), while others are exploring BRICS+ partnerships and growing trade with China.

There is some good news. Inflation forecasts now suggest price stability, with rates expected to stay below 4% through the year. Interest rate relief may also be on the horizon, with the SARB’s next decision due at the end of July.

“We’re cautiously optimistic,” said Levitt. “SME funding conditions are likely to improve with support from government, banks, and fintech platforms. But access remains patchy, and many smaller businesses still struggle to secure meaningful financial support.”

He added that the coming months will be a vital test for South Africa’s entrepreneurial economy.

“This is not the time to ease off,” Levitt concluded. “It’s time to double down on service, on product relevance, and on lean, focused execution. The next six months will be telling, but we’re ready.”

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