Cape Town industrial property market booms as warehouse demand outpaces supply
By Adrian Ephraim
IF you are looking for a warehouse in Cape Town at the moment, you better hurry up and be prepared to pay more than you did last year.
South Africa’s industrial property sector has positioned itself as the nation’s most resilient commercial asset class and the numbers backing this claim are difficult to argue against. National industrial vacancies are steady at 3.8%, Rode’s Q3 2025 survey shows, with rental growth for 500 square metre space up 8.4% year-on-year. Rentals are now some 31% higher than in 2019 prior to the pandemic, showing a recovery that has been remarkably robust through challenging economic conditions.
“Performance continues to be driven by strategic proximity to transport corridors and the ongoing demand for distribution centres, particularly in Cape Town where demand far outstrips supply,” says John Jack, CEO of Galetti Corporate Real Estate. “Major developers are accelerating investment as confidence strengthens across the commercial property market.”
Cape Town is not merely outperforming; it is in a class of its own. Vacancies in the city are around 3.7%, which is lower than the already tight national average and a direct result of the structural shifts in how goods move through supply chains. Established nodes such as Airport Industria and Montague Gardens are under capacity pressure, which is enhancing landlords’ pricing power. The knock-on effect is being felt across the broader metro as businesses search further afield for viable space.
Tenants in Cape Town are finding it harder and harder to find suitable premises, whether they want to expand or contract. With a dearth of industrial space, landlords are preferring tenants willing to sign longer leases and requesting detailed financial information, rental payment histories and business plans before agreeing terms. It is a tenant market that has successfully changed into a landlord’s market, and businesses are changing their expectations accordingly.
The reasons for this compression are well known. Speculative development is lower in the industrial market than in offices, and the rapid growth of online retail sales has increased demand for larger warehouses, especially those that are geared towards logistics. These logistics warehouses typically have lower vacancy rates, are often bespoke and custom built and hence attract higher rentals due to land and higher construction costs.
Cold chain investment adds more pressure. The R1.72 billion Belcon Cold Store in Cape Town opened in October 2025, typifying the type of purpose-built, large-format demand that permanently takes significant square meterage out of the available pool. The expansion of data centres is following suit. A large international data centre is one of two anchor tenants for King Air Industria, a new 280,000 square metre logistics, warehousing and distribution development adjacent to Cape Town International Airport, a sign of how the tech sector is now competing with logistics operators for prime industrial land.
New supply is coming but not fast enough to take the pressure off the established nodes. Brackengate 2, on the R300 freeway with access to the N1 and N2, has attracted tenants such as Amazon and Massmart. Atlantic Hills Business Park is a 44 hectare, secure industrial estate at the Potsdam interchange with access to Cape Town Harbour, Montague Gardens, Atlantis and Durbanville. Further out, new developments in Brackenfell, Stikland and Kraaifontein are coming to market through 2026 as developers follow the N1 corridor northwards looking for available and affordable land.
“Strengthening fundamentals, renewed investor activity and rapid technological adoption are creating a market that better aligns with global shifts. For stakeholders across the value chain, the year ahead represents a pivotal opportunity to move early and unlock long-term value,” says Jack.
Epping remains the undisputed industrial heartland of Cape Town with consistent high demand in both large format warehousing and sectional title spaces, with direct access to the N1, N2 and the Cape Town Port. Montague Gardens continues to be a preferred destination for light industrial users and distributors and Airport Industria and Parow Industria for logistics connectivity.
The fundamentals remain compelling for investors. Most listed REITs posted double-digit total returns for 2025, with industrial portfolios at some of the biggest players seeing notably lower vacancy rates and major developers bringing forward their investment timelines as confidence continues to build. The performance is not cyclical but structural, underpinned by logistics, warehousing, cold storage, last mile distribution and e-commerce infrastructure that remains critical to South Africa’s supply chain resilience.
That’s a message that’s less comfortable for businesses on the losing end of that equation. The industrial market in Cape Town is fast running out of time for the wait-and-see approach of the right space at the right price.
