Inospace, South Africa's largest owner of last-mile logistics and storage parks, has bought an N1-facing building in Midrand out of business rescue, its fifth park in the node. The deal comes as businesses brace for further interest rate hikes, higher fuel prices and a closely watched Johannesburg election on 4 November. Inospace is seeing a familiar response: companies are cutting fixed costs and moving into smaller, more flexible space.
"Inospace is a counter-cyclical business," says Rael Levitt, CEO of Inospace. "When the economy tightens, businesses don't stop operating. They rethink their footprint, giving up large premises on long leases for space they can scale up or down. Our strongest growth came during Covid, when companies rushed to downsize. We are seeing early signs of that again."
Inospace lets small units on flexible terms across more than 52 parks in Cape Town and Johannesburg. Its more than 2,100 SME tenants can expand, contract or move as conditions change, without being locked into long-term commitments.
The same logic is driving demand for outsourced warehousing. Inospace’s fulfilment and outsourced warehousing product was launched in Johannesburg has grown sharply as companies choose to outsource storage and distribution rather than carry the cost of their own warehouse, staff and systems. "Companies want a nimble cost base," says Levitt. "Outsourcing turns a fixed cost into a variable one, and in this climate that matters."
Inospace expects conditions to cool. "We are factoring further rate hikes into our planning, and property pricing has shifted as a result," says Levitt. "Fuel prices will squeeze businesses and consumers, and the market will slow. Many companies are holding back until after the election, waiting to see what kind of administration Johannesburg gets and whether it can fix the city's service delivery problems."
The new property has 5,242m² of lettable area on a 15,197m² stand with direct frontage onto the N1. It is almost fully let and was acquired at an attractive yield. The purchase price was not disclosed.
Business rescue sales give well-capitalised buyers access to assets that rarely come to market, at prices that reflect current conditions. "This is the kind of deal that makes sense in a cautious market," says Levitt. "It is income-producing from day one, it is well located, and the price reflects today's interest rate environment. It also takes our Midrand offering to about 50,000m² of lettable space."
Midrand, midway between Johannesburg and Pretoria, sits on Gauteng's main logistics spine, with direct access to the N1 and the Gautrain. For SMEs that distribute, service, or store goods across the province, that location cuts delivery times and transport costs. The N1 frontage also gives tenants freeway brand visibility, which is rare for SME-sized space.
Johannesburg is central to our growth, and over the last quarter we have acquired five new parks in the city," says Levitt. "We will stay disciplined and selective about further acquisitions until the economic, political and global outlook is clearer.
