8 Key Factors to Consider When Leasing Industrial Space
Category Industrial Property News
When many people think of commercial property, images of professional office spaces, glittering shopping malls, and high-rise hotels may come to mind. However, since 2020 and the exponential rise of e-commerce, there has been a huge increase in the need for industrial spaces to accommodate online retailers and their quest for distribution hubs. Not only that, but South Africa's manufacturing industry has seen impressive growth, "Manufacturing production in South Africa increased 3.4% year-on-year in April of 2023, the first annual gain in six months, and better than market forecasts of 2.5%..." says Trading Economics.
With that being said, the property market is working to keep up with this demand. New industrial hubs are popping up, and while they are impressive, if you're renting industrial property there are important factors to consider before you sign. You may feel the heat to snap up a property in this economic environment, but carefully consider your needs to ensure you choose one that justifies the longer lease period.
Make Sure The Space Is Sufficient
Before you start looking at industrial properties, you've got to know the square metres you'll need, as well as the maximum ceiling height. This is to ensure that the specific business operations can comfortably be conducted in the spaces you view.
Find Out If Anything Still Needs To Be Done
What shape is the property in? When looking at a property, it's essential to bring your fine toothcomb along with you. Look at the structural integrity of the space including the roof, flooring, walls, and mechanical systems. Assess if any repairs or maintenance are necessary, and make sure these repairs are in the contract you sign.
Consider Where The Property Is
Just like with residential property, location is one of the most important factors when it comes to renting industrial space. Consider the location of the industrial space in relation to your suppliers, customers, main transportation highways, and main transportation hub. Choose an industrial property in an area that optimises your logistical operations and makes access easy for your employees, customers, and deliveries.
Read The Fine Print
Once you've chosen the industrial property you want, go through the rent contract with a lawyer. Remember, when it comes to industrial spaces, lease agreements are often longer and more complex than for residential properties. Make sure you know exactly what your renewal options are, rent escalation clauses, whether there are any additional charges you need to be aware of, what maintenance you'll be responsible for, what maintenance your landlord is responsible for, and that any repairs you agreed on will be done in a certain amount of time.
Infrastructure And Utilities
We all know that electricity in South Africa isn't exactly reliable. This can make choosing an industrial property a challenge, as most businesses require continued access to power. So, does the property have either solar power or battery alternatives? And, if the latter, how old are the batteries? Would you be responsible for the upgrade, or would the landlord? Other than electricity, make sure all other utility bases are covered, including efficient water and sewage systems, HVAC systems, and internet connectivity.
Think About The Future
What is included in your business' five-year plan? And does the industrial property you want support his vision? Assess if the industrial space allows for future expansion or modifications - this could include extra space or flexible lease terms. You can negotiate some wiggle room in the lease agreement to accommodate your changing business requirements.
Make Sure Everything Is Up To Code
Do your homework around safety! You need to ensure that the space you're choosing complies with local building codes, safety regulations, and environmental requirements. Plus, you've got to understand exactly what your responsibilities are in maintaining this compliance including what to do with any hazardous materials, and be up-to-date with specific industry regulations.
Ease Of Use
How difficult or easy is it to access the industrial space? This is partly related to parking spaces for employees, any customers that may come through, and delivery vehicles. Also, if you have trucks coming into the premises, you've got to ensure that there aren't any height or weight restrictions that will make this difficult. Plus, safety. Find out what kind of security is employed at the space or industrial complex, and if it's sufficient. Try to find out if any crimes have been committed frequently in the surrounding area. The more you know, the better prepared you are.
Always involve professionals experienced in commercial real estate transactions on this journey. API Property Group can help you find the perfect property for your business and navigate the complexities of the lease and ensure that it aligns with your objectives. View our list of industrial properties available for rent.
Author: API Property Group
