KZN - A logistical corner stone

KZN- A Logistical Corner Stone

Westville- Durban. The construction of the two new intersections in Umhlanga, the M41 and the N2, as well as the Springfield, Chris Hani and N2, are near completion but what does this mean for Durban as a logistical heavy-weight in South Africa? Anyone in the Durban property sector will know there is a stock shortage for land and warehousing an in-turn a large demand. The start of 2015 saw an explosion in enquiries for warehousing units measuring between 1000m2 and 1500m2. The Durban property sector tends to comprise mostly of warehousing and is largely defined as a logistical hub, connecting the Joburg manufacturing sector to the southern areas of South Africa. This bodes well for the Durban property industry but begs the question “Is the stock available to capitalise on this demand?”

In response, large plots of land are being swooped up by investors in the Cato Ridge and Hammarsdale areas in preparation for the migration of the bigger logistical and supply chain companies. This is a result of these areas being predominantly flat, a plateaued haven amongst The Valley of 1000 Hills. A few well-established blue chip companies have already firmed their footprint in this area. The inner western areas have seen subtle development in comparison to the potential this area holds. However, in the same breathe; The African Bank debacle saw Ellerines vacate their 50 000m2 warehouse last year. An isolated situation, but as it stands, it is still vacant.

Another solution may be up North with Tongaat Hulletts Cornubia Industrial and Business Estate. This development as well as the co-operative relationship that they have established with the eThekwini municipality places the 200ha development as providing 80ha of industrial platform with a total bulk of 480 000m². Tongaat Hulletts hold on the Northern region does to an extent limit the movement available to private investors. However with the supply of land for warehousing being restricted across the greater Durban area, the bigger companies will take hold of this opportunity in years to come. But where does this leave the smaller operations?

The increase in Eskom’s load shedding, more accurately put “black-outs”, may see the smaller manufacturing and warehousing  businesses suffer to the extent of fore-closure and ultimately creating a buyer’s market for the more optimistic investor. Especially with companies that have heavy duty machinery that require hours to warm-up, forcing business owners to play a guessing game with Eskom’s load shedding “schedules”. There will be a trend for companies to consolidate the office component with the manufacturing/warehousing components and move away from the costly office parks as industry downscales and operating costs increase as a result of inflation.

Ryan Berry