Bruce Whitfield chats to Metboard Properties' executive director Tyrone Govender about the industrial property market.
Bruce Whitfield: Tyrone Govender is Metboard Properties’ executive director. He’s on the line to us now. Tyrone, it’s an interesting business, because as I understand it, you are dependent on the industrial market. Are all the properties factories and warehouses?
Tyrone Govender: Good evening, Bruce. That’s correct. Not particularly. We have a broad range of industrial properties, which includes warehouses, industrial parks, many units light industrial manufacturing facilities, and also retail warehouses and motor warehousing.
Bruce Whitfield: So there’s a nice spread in that industrial sector. The vacancies, I noticed, are very low in this part of the market.
Tyrone Govender: That’s correct. Metboard has traditionally come off a high base of vacancies. We currently in this interim period recorded into 2.1 percent vacancy. That translated, just to put it into perspective, is looking at 1.4 million m2. And the latest figures have indicated that that vacancy has dropped down to 1.5 percent.
Bruce Whitfield: That’s got to be a record best level, surely. To have such a low level of vacancy is great news.
Tyrone Govender: Most definitely. It is extremely encouraging, and we're hoping that with the fundamentals and the economy staying the way it is, we hope to sustain those levels.
Bruce Whitfield: What sort of geographic spread across this portfolio have you got?
Tyrone Govender: The properties are well spread. Of course, the bulk of the properties are sitting out in the Gauteng region, because that is effectively where the main hub of industrial activity lies. We also have an exposure to the Western Cape KwaZulu Natal, the Eastern Cape and one or two other areas.
Bruce Whitfield: We should be able to get a really good feel in the real economy for the sort of uptake that you have in this particular sector. Do you get the sense from your customers, in the sort of renewals you’re getting on your leases, that their businesses are strong and flourishing?
Tyrone Govender: Most definitely. There’s definitely a bullish sentiment out there. There is certainly an upswing in terms of the economy, with manufacturing going quite strongly, and we’re hoping with this momentum going, we can continue to show such positive results.
Bruce Whitfield: What sort of rental increases are you able to pass on to these industrial clients of yours. Because it’s a lot easier in office space. Corporates tend not to notice these sorts of things, but a guy with a welder, perhaps, and a couple of trucks to keep going, might notice the rental increase a lot more closely than perhaps, and accountant might?
Tyrone Govender: That’s true. However, if you look at the broad spread of the portfolio, there are many more larger areas as well, specifically if you’re looking at Metboard. Just to give you an idea within the period, there was an uptake of about 16.2 percent increase in the base rentals, but bearing in mind that it obviously comes off a very low base, historically.
Bruce Whitfield: So you are able to pass on 16 percent increases, and you’ve also got only a two percent vacancy rate. That suggests that the sector is in good shape.
Tyrone Govender: Most definitely.
Bruce Whitfield: Tyrone Govender, thank you very much indeed. Metboard Properties’ executive director was on the line to us from Johannesburg.