Branded business park owner and operator, Inospace has announced that it has acquired two new properties from Arrowhead Properties, taking its portfolio under management to over thirty business parks in Johannesburg and Cape Town.
The company has acquired the two multi-tenanted industrial parks in Eastleigh and Strijdom Park Johannesberg for a total acquisition cost of R70.1 million, reflecting a net initial yield of 9.5% and R3,700 a square metre.
The two parks have 18 600m2 of gross lettable area and primarily comprise of warehousing logistics and light manufacturing spaces. The properties are 95% let to a mix of SME tenants, which according to Inospace CEO, Rael Levitt, fits perfectly into the company’s investment criterion.
“These are well-located assets acquired on attractive yields, where we see potential to add value through our innovative business model and asset management initiatives. Both suburbs have a strong and diverse SME sector of which Inospace has good knowledge, having owned assets in the area for over four years. We continue to have significant resources to execute our strong pipeline of future acquisition opportunities,” said Levitt.
The properties will be repositioned, rebranded, refurbished, and fully serviced with additional value-added products. The parks will be named Plantation and Tungsten Business Park and will be integrated into the company’s network and branded as Inospace.
According to Levitt, Inospace is on track to meet its five-year objective of operating fifty business parks by 2022: “Inospace is not like traditional property owners. Of course, we think about our balance sheet and investment yields. But, unlike most property companies who concentrate on the corporate sector, our business is to create a supportive operational platform for small and medium-sized enterprises”.
According to Inospace, South Africa’s SME sector provides formal jobs for 28% of the country’s population. Furthermore, it is estimated to account for at least a third of the total turnover generated by the country’s formal business sector. “This is the market that we focus on supporting and growing”, explained Levitt.
Inospace has embraced technology in its operating platform, which has improved operational processes for smaller businesses, such as automated lease contracts that are simplified to three pages, leading to a frictionless experience for smaller businesses.
The industrial and logistics sector has been the standout property performing for some time now, particularly during the pandemic, where accelerated online retailing trends and new supply-chain resilience requirements have significantly boosted demand.
“The multi-let industrial sector has legs, mainly due to the structural imbalance in supply and demand for space. This factor is being felt across all industrial and logistics sub-sectors and means that there is very little chance of over-supply and consequent rental growth stagnation,” he concluded.