27Boxes Shopping Centre
27Boxes Shopping Centre is a R30-million used-container development on the corner of 3rd and 4th Avenue in Melville, providing 2 400m2 of retail space for more than 80 tenants. The retail centre comprises more than 100 converted shipping containers and the name—27Boxes—derives from the fact that each container provides just over 27m2 of space.
Citiq (Pty) Ltd, a privately owned investment and property management company, is the developer and owner of the centre. Futuregrowth Asset Management has funded Citiq through debt and equity investment in the business totalling R850-million.
Citiq Chief Executive Officer Paul Lapham said that everything from luxury hotels to accommodation had been built with used-shipping containers.
“We are applying the best practices that we gleaned from visiting and examining container construction projects throughout Europe, especially the work done in London,” said Lapham. “We realised there was still a mind-set in South Africa that viewed shipping containers as a cheap—meaning ugly and temporary—solution. We think we have successfully dispelled that notion with 27Boxes.”
An obvious advantage of converting containers is the speed of construction: “It took about two weeks to build 27Boxes but the finishing took almost three months,” said Lapham.
27Boxes is not the first container development in South Africa to be completed by Citiq. It follows on the success of a number of housing and student accommodation projects in Johannesburg.
Paul Semple, credit analyst at Futuregrowth says that the Citiq business of providing innovative building solutions delivers sound investment returns to pension fund investors while delivering on a variety of social impact requirements.
Earlier this year, Citiq launched a 75-room student accommodation block at Umhlanga Junction Extension, Brixton, also made from used containers and in early 2014 converted unused grain silos in Newtown, Johannesburg into trendy student accommodation, adding several floors of containers onto the silos.
Lapham pointed out that initially the residents’ association in Melville objected to the idea of a cluster of shipping containers in their backyard. Citiq persevered and today 27Boxes “contains” fashion outlets, art galleries and studios, the inevitable artisan bakery, and a number of restaurants as well as a garden and children’s playground. Citiq also addressed the parking concerns of the Melville residents by providing 150 parking bays.
He said that as property managers in the business of providing affordable rentals, Citiq realised it needed the offering to be attractive, without being seen as simply a large spaza complex. It targeted smaller outlets making, what he described as “small shops available at the right price”. Tenants can rent for a three-month period or five years and the monthly rental starts at R2 800 for a single unit (roughly 14m²) to R4 800 for double the size. There are also several full-size shops (over 100m²) that accommodate a greengrocer, restaurant and bakery. All the shops at 27Boxes have been rented, and Citiq claims it has a waiting list of close to 100 applicants for containers. In addition the centre makes use of energy-efficient lighting and prepaid electricity meters in the stores.
Futuregrowth through its development equity and bond funds holds a strategic stake in Citiq through debt and equity positions. Portfolio Manager Jason Lightfoot said that investments in infrastructure assets as a sector were typically in the form of unlisted transactions. These are usually seen as good enablers of economic growth and are able to meet the long-term return objectives of pension funds. The Infrastructure and Development Bond Fund, which was launched in 1995, now has assets worth more than R10-billion under management, consistently beating its benchmark over all periods.
“Our involvement with Citiq goes back to 2008 when we provided the facility to finance the acquisition of residential apartments,” said Lightfoot.
“Their long-term commitment to providing upliftment for communities combined with maximising returns for stakeholders fits well with our investment strategy”, he concluded.