Inospace has acquired a trio of new properties to take it above 25 parks measuring 350,000 square metres of lettable area.
The privately owned group, founded in 2017 acquires industrial buildings and converts them into flexible business parks, designed to appeal to small and medium enterprises.
This week the company announced the acquisition of three vacant properties including a former bank site from FirstRand Bank Holdings, a liquidated manufacturing plant from Econo-Heat Appliances as well as a 15,000 square metre industrial site in Goodwood Cape Town from Oasis Crescent Property Fund. The combined R65million acquisition price reflects a cost of R2,300 per square metre and all will be refurbished in a 6-month cycle and leased out by the company’s internal leasing teams.
Inospace's latest acquisitions follows the company’s recent launch of two Johannesburg business parks in partnership with Fortress REIT Ltd. In December 2019, Inospace entered into a management agreement with Fortress to operate multi-let industrial parks under the Inospace brand and operating model.
Inospace’s business parks, measuring between 10,000 and 30,000 square metres, have attracted companies which are downsizing in a weak economy and which want to pay rentals on more flexible terms than traditional landlords offer.
Inospace is currently in the process of rolling out further business parks in South Africa as well as in the UK where it has recently launched its first site, a 13,250 square metre industrial and office park at Glasgow Airport in Scotland.
“Our offering of short and flexible leases is attracting demand from tenants who don't want long term commitments. Flexibility, community, affordability and customer focused simplicity is at the heart of a disruption in commercial real estate that is here to stay”, said Levitt who believes that the Coronavirus pandemic will fuel Inospace's business model.
Inospace and a growing band of flexible leasing operators are capitalising on what they see as a structural tenant driven demand change of traditional commercial real estate. “We believe that commercial real estate is shifting away from being an industry governed by low-touch asset managers to an industry governed by high-touch operating platforms”, said Levitt.
Levitt believes that the shift is most visible in retail and office but is applicable to all real estate. “Part of this change is due to the thickening layer of service required by tenants. And tenants increasingly want a turnkey solution. The growing popularity of our flexible short-term leases is supported by our vertically integrated platform that manages project management, sales, leasing as well as customer relationships".
Levitt believes that landlords who build operating platforms to support their customers businesses will grow in a disrupted and strained environment. "So much is happening in real estate right now. The industry is in serious flux but that’s where we believe the opportunity lies”.
“A distressed property market suits our strategy of picking up large properties at way below replacement value and transforming them into multi-let, multi-use parks that offer spaces at affordable prices that are then overlaid with a suite of business benefits, communal facilities and a growing range of tech-enabled services. We believe that by providing flexible leases, brand, services, customer value, and experiences we are creating a niched and attractive asset class”, said Levitt.