Whilst niched property developments are nothing new, recent developments appear to indicate an acceleration of developments targeting specific business segments, tenant types or consumers looking for a specific product.
The age old question of specialisation versus diversification has also played itself out in the South African listed property sector for years. Funds with retail, industrial, hospitality or other focuses have been fairly common with the advantages of focussing and developing competitive advantages in specific areas weighed against the risks associated of putting all one’s eggs into one basket.
While many recent specialised developments are to some extent a sign of a more mature property industry with fewer gaps in the “traditional” market, the retail industry has from the first cities and towns had areas, districts or high streets that serviced specific products and consumers.
Examples of these include garment or textile districts, watch or jewellery streets, medical streets, antiques districts and fish and fresh produce markets. A standout example of modern retail specialisation in South Africa is Johannesburg’s Design Quarter that incorporates design and interior with focussed retailers and tenants in a one stop shop for consumers requiring these goods and services.
Durban’s Stamford Hiill Road factory clothing district is a well-known high street version of these targeted retail districts. New niched retail developments include those that deploy a specific type of architecture or construction materials that take root as is seen by the proliferation of “Box Parks” made out of shipping containers.
We’ve seen more and more of these developments pop up around the country. Centered around the concept of being able to live, work, and play in the same area, mixed-use developments aim to bring different people and industries together. One of the latest examples is Loftus Park in Pretoria.
Developed by Redefine Properties and Abland, the first phase comprises 34,000m² A-grade office space, a premium gym, open-air piazza with restaurants and convenience retail. There is also more to come. A new 152-room Protea Hotel by Marriott will debut at the site. Phase Two, which will add another 7,600m² to the Loftus Park development, will see a hospital join the precinct, as well as 13,000 m² of office space in Phase Three.
Pieter Strydom, commercial asset manager, Redefine Properties, says: “The opening of the first phase of Loftus Park realises its vision of being an iconic mixed-use precinct that provides an integrated work and play environment and is positioned to ignite the greater node around it.
An extremely innovative and unique sector specific node is Durban’s Professional Quarter, which utilises a mix of location, a differentiated product, supplementary services and positioning to target the legal profession. Its proximity to the supreme courts, with a shuttle service, premium office environment, mediation and arbitration facilities, members club and IT infrastructure, have attracted long term commitments from leading advocates and attorneys against fierce competition. A number of initiatives and nodes targeting call centres, student housing and education have also been developed across South Africa.
The industrial sector has seen zoning and health issues coupled to the desire to create synergies between businesses in the same sectors grouped together. Chemicals processing and manufacturing, automotive, technology and pharmaceutical areas are commonplace.
The high tech world of modern logistics has seen the development of targeted logistics parks including Clairwood in Durban and Plumbago in Johannesburg.
Recent developments in the retail and listed property sectors have also driven a re-think regarding diversification in respect of individual companies versus exposure across multiple shares or even index trackers. The challenge becomes slightly more complicated when individual companies success and size means they come to dominate a sector.