Industrial property sector thrives amid economic challenges in South Africa

There are pockets of excellence, and the industrial property sector remains buoyant despite ongoing economic challenges.  

This was because South Africa’s economy is at a crucial crossroads with ongoing global trade pressures, a shrinking manufacturing sector, climbing unemployment and low business confidence impeding sustainable economic growth.

According to the World Bank, over the past decade, SA's GDP grew at an average of just 0.7% per year, leaving real per capita income roughly at 2007 levels.

The global institution says unemployment reached 33.2% in the second quarter of this year, with youth aged between 15 to 24 years hit the hardest at 62.2% and women disproportionately affected.

More than two-thirds of South Africans live in poverty, with the poverty rate estimated at 68% in 2025, it says. 

Speaking ahead of the company’s next auction on October 30 at the Bryanston Country Club in Johannesburg, High Street Auction Company director, Greg Dart, says that “hero properties” are attracting substantial investor attention.

He says one of the top performers is the logistics and warehousing sector, which not only contributes approximately 10% to 12% to GDP but plays a significant role in the supply chains of both import and export businesses.

“With no end to tariff wars in sight and the tentative renewal of the Africa Growth and Opportunities Act (AGOA) for just a year, intra-regional trade could intensify. South Africa remains the gateway to the region for both imports of raw materials and consumables and exports of commodities and manufactured goods.

"That explains the strong demand for strategically located warehousing and distribution centres,” he says. 

“In a challenged economic landscape, industrial real estate is becoming the quiet barometer of South Africa’s economic resilience – and a point of competitive advantage for firms that harness the right assets,” says Adrian Saville, who holds a professorship in economics, finance and strategy at the Gordon Institute of Business Science (GIBS). 

Even as headline confidence indicators sag, the logistics and warehousing sector is said to continue to attract capital because it sits at the intersection of trade, energy reliability, and urbanisation.

In South Africa’s fragmented growth landscape, these ‘hero assets’ are not just properties-they are infrastructure for competitiveness. Investors who understand this are effectively betting on the arteries of the real economy, where the flow of goods and productivity gains matter more than sentiment, Saville says. 

However, too few “hero properties” come to market, Dart admits: “Because distribution is alive and well, those types of facilities are deeply in demand. Typically, developers actively build for tenants and have immediate occupiers.

"Companies looking to expand or source new premises must join a long queue. Unfortunately, a lot of up-and-coming companies haven't got time to wait to build their own greenfield projects.”

The High Street Auction Company has identified three key examples of these properties that are due to come under the hammer. 

It says the first is a fully tenanted industrial park in Pretoria West that includes warehouses, workshops and offices, and large-scale industrial and manufacturing activities. A fully paved yard is ideal for logistics, parking or outdoor operations. Centrally located, it offers easy access to Pretoria CBD, Laudium and Centurion.

“This property is located in a prime industrial node and has a gross annual income of around R21 million. In addition to being financially sound with strong tenancy, it is a critical national key point for heavy industry, which means no load shedding,” Dart points out. 

He says the second property, a 6650m² Stanger warehouse, is well-located within Kwa-Zulu-Natal’s North Coast industrial hub: “Positioned on the N2 with R74 links inland, it serves both coastal and inland markets.

Most importantly, it sits between Durban, Africa's busiest port and Richards Bay, South Africa's largest bulk port and will form part of the province’s R1-trillion aerotropolis. In an area where bulk services are constrained and new developments face delays, this immediate capacity gives occupiers a major operational advantage.”

The warehouse has two wide access points (roller shutter and steel door) for horse-and-trailer entry, multiple offices that include a director's office, admin block and production manager's office, a separate research and development building, a secure yard and internal loading bays. 

The third, a large, vacant industrial warehouse/factory in Mostyn Park, Lanseria, which was formerly occupied by West Pack before it went through business rescue and restructured, is ideal for logistics, distribution, manufacturing or storage.

It is strategically located close to Lanseria Airport with easy access to the N1 and N14 highways, and it provides modern infrastructure. Features include impressive eave heights ranging from 9 to 17 metres, an operational sprinkler system, effective large truck articulation space and a 1MVA power supply with a large backup generator.

Dart says his team has already proactively approached potential investors with similar business models to the previous tenant: “We are constantly, aggressively taking the initiative in the marketplace as opposed to waiting for somebody to come and sign up.”

Dart continues: “The benefit of an auction of these desirable industrial assets is that you bring together a group of investors to compete and drive up the price.  You will extract a better price in a competitive environment.”

Auction terms are very specific: “These transactions are not subject to finance. When an investor raises a paddle or gives us an offer, they've completed their due diligence. They are also required to pay a deposit of 16,5% of the offer price alongside their signed agreement.

"Further to that, they've only got 45 business days to raise the bank guarantee/cash for the balance of the purchase price.

"When a seller gets an offer on auction terms, it's unconditional. If the seller accepts, the buyer has no exit. If they fail to perform, the deposit is relinquished as damages. So, this is very bankable.”

For a seller in an uncertain market, this is a welcome outcome that will facilitate the liquidation of a non-core asset so that capital can be deployed elsewhere, Dart adds. 

The October 30 auction not only features these three gems but a wide range of properties that include everything from student accommodation, upmarket prime investment apartments and luxury residences to prime office space, boutique hotels, lodges, and vacant land for development.

According to the FNB Property Broker Survey-Property Sales Activity for the third quarter of this year, industrial property remains the strongest of the three major commercial markets, supported by low vacancy rates and superior returns.

Demand is driven by the ongoing shift toward e-commerce, which has increased requirements for warehousing and logistics space, even amid elevated levels of new development.

The Office Market, which has shown renewed strength after years of weakness, benefits from improved affordability due to sustained real (inflation-adjusted) rental and valuation declines. Coastal metros such as Cape Town and eThekwini are experiencing falling vacancy rates, supported by growth in the call centre and business process outsourcing sectors.

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