Over the past five years, South Africa’s warehousing and industrial property sector has outperformed other commercial real-estate classes. In 2024 alone, the industrial sector delivered a total return of approximately 15.2%, outpacing both office and retail sectors, a testament to its resilience amid economic headwinds.
But as a first-time tenant, finding premises can be daunting. What do you need to be aware of and what should you look out for? Paul Stevens, CEO of Just Property, shares some practical pointers.
Choosing the right warehouse means balancing technical specifications with your operational needs, making sure the space can handle your business today and adapt as it grows. The following factors will help guide your decision.
Floor space and height
Start with the Gross Leasable Area (GLA). Think carefully about throughput and pallet requirements. Contemporary A-grade warehouses usually offer 8–13 metre eaves, while premium facilities may go beyond 15 metres, allowing more efficient vertical storage.
Docking and yard features
The yard layout can make or break logistics efficiency. Look for dock levellers, on-grade doors, canopies, staging areas and adequate yard depth for container-handling trucks. A standard dock height is around 1.2 metres, which accommodates most transport fleets.
Floor strength
Racking systems, forklifts and heavy machinery demand strong slabs. Ensure the warehouse has sufficient thickness, robust joint layout and floor loading capacity to carry your planned operations safely.
Power and resilience
Interruptions in power can be costly. Clarify whether three-phase power is available, whether the facility is ready for rooftop solar, and whether there is capacity for backup generators and water security measures.
Fire-safety and compliance
Safety regulations are non-negotiable. Buildings with sprinklers should comply with ASIB requirements, alongside SANS 10400-T (Fire Protection) and SANS 10287 (Sprinkler Design). Many insurers make ASIB sign-off a condition for cover.
Zoning and permitted use
Before signing, verify that the warehouse is zoned correctly for your type of operation. Municipal approvals may be necessary, and rules differ from city to city. For example, the City of Cape Town’s zoning regulations clearly outline permissible uses.
Note that certain special provisions may also apply:
- Hazardous materials: If you intend to store flammables or chemicals, you will need classification under SANS 10228 and compliance with Major Hazard Installation (MHI) rules under the OHS Act. This often involves specialised risk assessments and off-site planning.
- Customs-bonded storage: For operations involving imported goods, SARS issues specific A/B/C-type bonded warehouse licences with strict control protocols.
Use this checklist when visiting sites and compare all checklists before making your final decision:
Understanding your lease
Unlike residential leases, which are governed by the Rental Housing Act, there is no single piece of legislation that regulates commercial leases in South Africa. Commercial leases are governed by common law and the contract you sign. The Consumer Protection Act generally does not apply to juristic persons with turnover or assets above R2 million, which means many commercial tenants do not benefit from its protections. This makes the lease document itself the most important safeguard for both parties.
These are some of the terms, costs and conditions you can expect to see outlined in a warehouse lease. Reading the fine print carefully and seeking professional advice will help you avoid surprises.
- Base rent: Typically quoted per square metre per month, this figure is supplemented by operating costs such as rates, security, repairs, insurance and VAT.
- Escalations: Annual increases are usually built in. Fixed escalations of 8 to 10 percent are common, although CPI-linked increases are increasingly being used.
- Deposit or guarantee: Landlords generally require a deposit of one to three months’ gross rent, though the exact amount depends on the tenant’s financial standing and can sometimes be negotiated. Deposits can also be in the form of a bank guarantee and should be held in a trust account, with clarity on when and how they will be refunded.
- Fit-out support: Tenant Installation Allowances (TIA) and Beneficial Occupation (BO), which is a rent-free build-out period before trading, may be offered depending on the lease length and landlord agreement.
- Heads of Terms (HoTs);This sets out the framework of the deal, including parties, lease area, rent and escalation, deposit, BO/TIA, commencement, renewal and expansion options, assignment, maintenance, reinstatement and termination rights. An experienced broker can guide you through these details, but it is always worth having a legal professional review the document before signing.
- Green clauses: Many modern leases include green clauses covering energy-data sharing, solar PPAs, LED retrofits and water-saving measures. These provisions can reduce operating costs while aligning with environmental commitments.
Types of commercial leases:
The importance of getting expert help
At Just Property, we understand that each decision you make when leasing a warehouse has long-term implications for your business. It is not only about square metres and rent, it is about making sure your operations will run smoothly and sustainably.
My best advice is to never hesitate to ask questions, and to partner with an experienced commercial property broker. With the right advice, your warehouse can become an asset that supports growth rather than a burden that holds you back.
