An explosion of interest and uptake in recent years has seen the mixed-use industrial park, Capricorn Park, turn into a resounding success story as developers, owner occupiers, investors and tenants both local and national have converged on this secure and affordable, prime situated location near Muizenberg in Cape Town’s Southern Suburbs.
Says Andries Louw, director of Annenberg Property Group: “Over the past two years we have completed sales transactions for vacant land and leases in Capricorn Park to a total value of approximately R54 million by Annenberg Property broker, Daniel Botha”.
“This development may have taken a while to realise its potential but has proven its worth as an ideal location with sound investment potential as land value has doubled in the past two years alone”.
“The park is now extremely well established with only six sites available to still be developed. These are owned by construction companies who are holding onto them in order to carry out turnkey projects”.
“Launched over a decade ago and combining commercial and light industrial, Capricorn Park was brought to market to meet the growing popularity of secure parks, particularly with limited land available in the Southern areas of Cape Town where you could develop property to suit your own particular requirements”.
“The desirability and success of Westlake, as well as the low vacancy levels in nearby industrial nodes such as Retreat, coupled with the demand from start-ups and small enterprises, were key drivers underpinning the development of Capricorn Park, which comprises mostly light industrial mini-unit parks. For example, it makes perfect sense for start-ups with special requirements, such as those in the food industry and seeking HACCP (Hazard Analysis & Critical Control Points) compliance, to acquire brand new units rather than invest considerable capital on older units – especially those with asbestos roofs, in order to achieve compliance”.
“With the 2008 crash everything came to a halt. As Capricorn was still finding its feet and had not yet hit critical mass, the demand from new and small businesses dried up, leading to long term vacancies, reduced rental rates and declining land prices. Although Cape Town was experiencing a shortage of industrial zoned land at the time, Capricorn Park was then considered too far south, which outweighed the appeal of cheap land opportunities”.
“As a result, we struggled to convince businesses further north to consider the area, as typically a client looking at Epping preferred to consider other areas such as Airport, Ndabeni and Parow, as they are in the same general vicinity.”
Louw says after the liquidation of a few large landowners in the park, the situation began to stabilise and by 2014 new developments started to break ground again with rentals edging higher. “In early 2015 I was approached by a developer who wanted to launch a mini-unit industrial park project. As he wasn’t familiar with the Cape Town industrial market he had no preconceived notion about any particular area and was open to suggestions”.
“After compiling a list of all available sites in the relevant size range from 1 000 to 5 000sqm and the going rental rates in those areas, I realised what an obvious buy Capricorn Park represented at the time. You could acquire serviced industrial land for just R600 a square metre in a secure industrial park, compared with upwards of R1 000 per square metre in other areas – and not even within a secured park”.
“Rentals in Capricorn were also similar to rentals in other areas, which meant you could achieve a higher return on your investment. This is when I realised that Capricorn Park was Cape Town’s ‘little Johannesburg’ where you could buy land cheaply yet achieve high rentals. Needless to say the developer bought a piece of land at this rate.”
From then on Annenberg focused on this node as the fundamentals were sound. Since 2015 the park has experienced high interest, with the majority of the builds still mini-units of 150-300sqm and with an increasing number of larger units of 500 to 1 400sqm in the pipeline.
Growing businesses in Westlake began to turn to Capricorn as an option as they were used to relatively new premises. These include Charlotte Rhys, which manufactures luxurious bath, body and lifestyle products and relocated from a 750sqm facility in Westlake into 2 120sqm premises consisting of some 400sqm of offices and showroom over two floors and a 1 700sqm warehouse utilised for manufacturing, storage and distribution. Concluded through Botha, and commencing in February 2016, this was a three year lease with an option to renew for a further three years.
Other recent leases concluded by Botha range in size from 322 to 1 181sqm comprising warehousing, factory and office space for businesses in the food, motor and other industries, while vacant land sales vary from plots of 1 543 to 3 443sqm. On one of the sites, comprising 2 408sqm, seven mini sectional title units of 215sqm each have been sold at R1.35 million each. Set on an erf of 1 949sqm a further development of five mini sectional title units each 256sqm in size was sold for a total of approximately R7.234 million to one buyer who owns a warehouse directly opposite the development and utilises the units for storage. Two other plots of 3 443sqm and 2 318sqm are also being developed into mini units.
Says Daniel: “In addition, an owner occupier has acquired a vacant site of 1 543sqm in order to construct a workshop and storage facility for his own collection of classic cars, while another buyer, a developer who was planning to construct offices and/or mini units, was made a better offer by another party who purchased the property at a substantially higher rate. He made a net profit of approximately R1 million a year after taking transfer”.
“As the success of Capricorn Park is no longer a ‘secret’, there has been a major increase in investor enquiries over the past year. Many units have been acquired by investors, with initial yields ranging between 8.5 and 11 percent.”
For many businesses, especially import and export operations, the park is ideal for their distribution facilities because of the security and was completed, including the installation of infrared and motion sensor cameras.
Daniel says there are also numerous rental enquiries, mainly from local businesses wishing to relocate from other areas in the southern industrial nodes such as Diepriver, Westlake and Retreat, where lack of space or security is the main issue. Rental rates in Capricorn Park are currently between R55 and R60 per square metre.
“All sizes of property are sought after and there are no vacancies for those measuring between 1 500 and 3 000 sqm,” adds Daniel.
Further enhancing the appeal of Capricorn Park as a convenient location for businesses and staff is the expansion of Capricorn Square Shopping Centre, just outside the entrance to the park, from 6 000 to 11 000sqm.