Owner and operator of branded business parks, Inospace, has announced a partnership with Fortress REIT to launch an initial portfolio of 20 industrial properties in Cape Town and Johannesburg.
Through Inospace, Inofort will offer a combination of warehouse, logistics, storage, and work space at an initial valuation of R1.25 billion, spanning a total lettable area of 200 000m2 with over 600 tenants. Fortress REIT will contribute 12 multi-let assets with Inospace contributing the balance.
All parks will be branded and repurposed to provide Inospace’s facilities, such as staffed business hubs, meeting rooms, and business storage with the introduction of a new range of amenities to assist SMEs with last-mile logistics including rigging and lifting equipment, handling apparatus, packaging materials, waybill printers, and an online courier and shipping platform.
The ongoing running of the assets in the JV will be governed by a management contract.
“Our collaboration with Fortress REIT represents a significant opportunity for both companies, and the Inospace team is excited about being able to grow our footprint and enhance our value-adding customer offering as a result“, explained Inospace CEO Rael Levitt.
According to Levitt, the demand for SME-focused industrial spaces predates Covid-19: “With little new multi-let mini-industrial construction in a decade, favourable supply and demand fundamentals have resulted in low vacancies and strong demand by smaller companies. We are in a dynamic property niche with strong tailwinds which is proving to be structurally resilient“.
Steve Brown, CEO of Fortress REIT, commented: “This partnership provides us with immediate scale in a niche and growing asset class through the formation of an attractive portfolio into which both Fortress and Inospace are contributing assets. We are excited to work alongside a specialised best in class operator that is reimagining the tenant/landlord relationship“.
The partnership results from a trial with two Fortress-owned properties in Gauteng, which were successfully repositioned into serviced business and micro-logistics parks named Wadeville Works and Electron Exchange. “Specialisation in smaller urban industrial and last-mile logistics spaces has proven to be a high growth sector“, added Brown.
Subject to suitable investment opportunities, Inofort may consider opportunities to grow the JV’s portfolio primarily through acquiring and repurposing additional assets from Fortress or finding other portfolios which suit their optimisation model. The partnership will capitalise on the asset management expertise of both Fortress and Inospace, who bring complementary skillsets to the joint venture.
“We are delighted to be growing our business by enhancing our partnership with Fortress,” says Inospace director Jeremy Katzen. “We are poised for growth, both organically and by acquisition, and are uniquely positioned to take advantage of growing demand for our on-trend offering in this rapidly growing globally recognised real estate niche“.