Top 6 considerations when choosing an Industrial warehouse facility in Cape Town

Despite the effects of the recent drought on the Western Cape's agriculture and tourism sectors over the last two years - things are really looking up in terms of local economic growth. Minister Beverley Schäfer had the following to say:

"The Western Cape economy remains relatively stable despite challenges affecting consumer spending. The province has recorded good gains in employment, and continues to record the lowest expanded unemployment rate in the country." source - https://www.da.org.za

It is against the above economic backdrop (and Cape Town's other breathtaking views and natural beauty) that makes it a viable business address with an incredible lifestyle for almost every economic demographic.

However, when considering leasing or purchasing the right warehouse or factory location in a beautiful area like Cape Town, it is tantamount to consider the following criteria carefully as it will have a knock-on effect on your companies productivity, efficiency, and ultimately your bottom line.

Let's review the top 6 key considerations when selecting the best possible warehouse or factory location.

1. Rental Rates & Sales Rates

Cost will remain a priority when selecting the right location of a warehouse or factory, but it must not be the only one. Hidden costs such as additional security requirements and water usage penalties may often offset any savings on cheap rental rates.

Average prices in In the Western Cape can range from as low as R45/m² per month and high exposure or prime properties can be as high as R80/m² per month.

For high exposure and prime locations you can expect to pay about 20% more than the area average.

See table below for a breakdown of the average rates per area:

Note: For High exposure and Prime locations an approximate 20% can be added to the above estimate.

(Estimate provided by Rawson Commercial Blaauwberg based on sales and rental averages from 2017 & 2018)

2. Workforce: Labor Costs & Skills availability

In Cape Town there is a variety of geographical locations that offer a diverse workforce with various skills. The ideal situation would be to find the right location within close proximity of the required skilled labour force.

As factors like supply and demand will have an effect on the wage bill of the operation. i.e. A shortage of workers and high demand will drive salaries up, and vise versa - high levels of workforce availability and low demand will lower salaries.

Also ensure that the right quality skilled workers are available in your area. The absence of which will affect the productivity and viability of you business.

3. Transportation

If road freight is the prefered mode of transport, careful consideration must be given to the road and highway network that feeds the particular area, especially pertaining to:

• Peak traffic times
• Traffic volumes.
• Highway accessibility - on & off-ramps
• Public transportation access for workers
• Average traffic speeds
• Road conditions and safety
• Visible roads signs
• Proper traffic signals

All of the above factors will increase fuel consumption, accidents, and result in a loss of productivity.

Map of the greater Cape Peninsula - source Google maps

4.Proximity to Ports of Entry

The main mode of transportation used to receive or ship goods to and from the warehouse or factory must be prioritised. For example, if most of the cargo is imported and exported via air freight, then being as close as possible to the airport is ideal - or alternatively facilities with easy access to highways with a direct connection to the airport.

Being as close as possible to the point of the most predominant transportation mode , will control drayage costs.

Table with distances from Sea port, Airport, and City centre.

All distances measured on Google Maps

5. Supply Chain & Local Environmental Factors

The location of; or access to the main supply chain partners is always a key consideration.

Local environmental factors such as adverse weather conditions and risk of exposure to natural disasters should also be considered. Case in point the recent drought in the Western Cape and how that affected the use of water for industrial applications.

Other local environmental factors like proximity to noisy neighbours and peak hour traffic congestion could also influence your operations negatively.

6. Growth Potential

Always consider the bigger picture in terms of growth potential or in a worse case scenario; downsizing the space you need. If the Industrial park offers easy expansion it will save having to find a new location that matches your expanding needs. Remaining in the area you will also be able to retain your workforce and utilities, and minimize the inconvenience associated with the relocation of your warehouse.

You will want to double check the availability and cost of utilities. Some warehouses are more dependent on one utility than another. For example, refrigerated warehouses are more dependent on electricity and water, and in Cape Town water is a scarce resource.

The future of communications lies in access to the internet - and therefore it is imperative to establish what the available access speeds and link types are, as well as all associated costs.

Conclusion:

It is worth the effort to properly take a look at all the contributing factors that make one particular area more suitable for your business than the next. It will also have long term effect on your productivity, and ultimately profitability.

If you still have questions about any area in particular please feel free to get in touch via our CONTACT US PAGE. We also look forward to your comments below.