The perks (and challenges) of owning a warehouse

Warehousing is a crucial facility for most large businesses in South Africa. Inefficient warehousing can have dire effects on your entire supply chain right up to the end-user, which could reflect poorly on your business and profit. Since the pandemic, the demand for warehousing has increased, mainly due to an increase in online sales, which demand more storage and distribution facilities. We decided to explore some of the benefits as well as challenges that come with owning a warehouse in South Africa today.
 

Short-term leases
Post-pandemic, many companies are hesitant to sign a 3 to 5-year contract like in the past. This has brought about the need for shorter contract periods when leasing or co-sharing warehouse spaces. 

Consumer buying habits
Before lockdown, consumers were shopping in the traditional way of going into a mall to do their shopping. When retail stores closed their doors because of the lockdown, they saw exponential growth with online sales. This shift to e-commerce has driven the need for warehouse space, and more of it. 

Smaller, decentralised warehousing

The new norm is to have goods closer to the consumer. This is one way to accommodate the consumer's need for speedy deliveries. Decentralisation also enables delivery flexibility. One company can be located in Durban and also have warehouses in Johannesburg and Cape Town. Their own drivers could be employed to deliver goods, and, as such, cut logistic costs.

Increase in cold storage
One of the fastest-growing warehouse sectors has been the increase in cold storage facilities. Since consumers are buying more of their groceries online instead of in-store, there is a growing demand for temperature-controlled storage warehouses.

Security
In South Africa, warehouse security is huge. Thieves and "inside jobs" are real issues for warehouses and their owners. Whether you outsource your warehousing needs, or manage your own, it is important to regularly update your security.

A few tips to increase the value of a warehouse

Basic care (TLC)

You need to maintain an orderly and well-functioning space, which is clean, organised and efficient. Although it may seem obvious, many warehouses are neglected. If anything needs repair, take the time to replace or fix it. Things like temperature control, ventilation and plumbing are important areas that should be in tip-top condition.

Boost your technology

Buyers are looking for properties that have a strong technological infrastructure in place. It will transform an outdated warehouse and add great value. While technology is a large investment, it will pay off in the long run and, in future, buyers will come to expect it from a property.

Improve storage

Expand your on-site storage facility. It plays a huge part in the warehouse and will improve its value straight away. You could either install more shelves or expand the footage for more usable space.

Lighting

All warehouses need good and strong lighting. Options have greatly improved over the years and good lighting can be a great asset to your property. It will help with workflow and sufficiency in areas such as delivery and packing. If you don't have a generator, install one to help with load shedding schedules.   

Parking

Sufficient parking is key to any warehouse. Consider expanding the parking capacity to facilitate a seamless station. This way future tenants can increase pick-ups and deliveries simultaneously. 

In closing, a warehouse is a fairly low-maintenance property and investors can focus mostly on its functionality. It can be used for anything, not just storage. It's a solid investment, with more and more investors opting to make owning one part of their portfolio. API is one of South Africa's largest industrial property groups, and our team of expert brokers are on hand to guide you into the right direction with regards to investing in a warehouse in your preferred area. Get in touch today.