Why South Africa's logistics sector is leading the way in 2025

The logistics sector remains a standout performer, backed by sustained demand for high-quality, secure warehousing space. 

Releasing a pre-close operational update for the period after 30 June 2025, Fortress Real Estate said vacancy rates in the South African logistics portfolio remain at a historic low of 0.3%, with a five-percentage-point reduction in the CEE portfolio following lower vacancy at Gdańsk Logistics Park, reaffirming the appeal of the real estate companies’ assets.

“Following the recent 25-basis-point interest rate cut by the South African Reserve Bank(SARB), and better-than-expected operational metrics, we are increasing our distributable earnings forecast for FY2026 to a range of R2.099 billion to R2.129 billion, representing year-on-year growth of between 7.3% and 8.8%,” said Steven Brown, CEO of Fortress Real Estate Investments Limited.

Demand exceeding supply

FNB Commercial Property Finance’s latest Q3 2025 Property Broker Survey also revealed a notable strengthening in South Africa’s commercial property market, with brokers indicating that demand now exceeds supply across all three major sectors, industrial, office and retail, for the first time since the survey began in 2019.

The findings are said to reflect improving business confidence, easing financial pressures among owner-occupiers, and renewed investment interest driven by lower interest rates and improving economic conditions.

“Since 30 June 2025, we have completed 55,231m² of new logistics developments, with a further 76,550m² currently under construction. Pre-letting activity remains robust, driven by the superior quality of our facilities, which include best-in-class flooring, generous yard space, and higher eaves for enhanced racking and volumetric efficiency.

"These properties also benefit from excellent connectivity and well-established transport infrastructure,” commented Brown.

The Fortress Retail portfolio continues to perform well, achieving like-for-like tenant turnover growth of 3.9% and sustaining a low vacancy of 0.6%. This resilience reflects the ongoing success of asset management initiatives and the positive impact of recently refurbished and expanded centres.

Fortress’s capital recycling strategy, enhancing core assets while disposing of underperforming properties, continues to deliver tangible benefits. Year-to-date, Fortress has sold non-core properties with a combined book value of R258.7 million, realising proceeds of R271.5 million, representing a 4.9% premium to book value.

The average yield achieved on disposals, excluding land, during the period was 9.6%. These funds have been reinvested into new logistics developments, strategic retail upgrades, and extensions. At the date of this update, assets with a combined book value of R159 million are classified as held for sale, the company said. 

Fortress reports that vacancies in its South African logistics and logistics developments portfolio continued to improve, dropping to 0.3% as of October 31 from 0.4% recorded on June 30. This update was provided as part of the company's portfolio update.

Continued demand in new developments

This low vacancy level is said to reflect continued demand for newly completed developments, effective asset management across the existing portfolio, and the enhanced overall quality of our logistics platform following the successful disposal of higher-vacancy non-core assets.

The Construction of the 20,840m² warehouse for Crusader Logistics was completed on schedule in August 2025. Crusader Logistics, an existing tenant at Eastport, is expanding within the park and has signed a five-year lease, with an option, in favour of Fortress, to extend for a further five years. This lease commenced on 1 September 2025. 

The construction of the 30,296 m² warehouse for Liquor Runners was completed on schedule, with the tenant taking beneficial occupation in October 2025.

Demand for space at Eastport is said to be encouraging, and construction of the 12,996 m² speculative warehouse will be completed in December 2025.

This warehouse has been let to an existing tenant in the park, Teralco Logistics, on a three-year lease. Teralco Logistics will vacate its current warehouse of 22,095 m² in the park, which is now actively marketed, with encouraging interest from prospective tenants.

Following these completed developments, a further 30,000m² of GLA is available for development at Eastport. In addition, Fortress retains the option to expand north of Eastport, a site on which it can develop an additional 150,000 m². Additionally, Fortress has recently commenced discussions on a site south of Eastport on which approximately 90,000m² of GLA can be developed.

Fortress says it has concluded a lease for the development of a new warehouse measuring 24,507m² with Suzuki. Construction of this warehouse commenced in July 2025, with beneficial occupation planned for July 2026.

The first warehouse at Longlake, measuring 19,099m² and previously leased to Liquor Runners, has been let to Overnight Logistics. Demand for space at Longlake is said to be promising, and the construction of the 18,982m² speculative warehouse is on schedule for completion in October 2026. Once these developments are complete, Longlake will be fully developed.

Regarding the Clairwood Logistics Park, discussions are said to be ongoing with a potential tenant for the final site, Pocket 6. Fortress expects to finalise a lease for a 30,000m² warehouse during the 2026 calendar year.

Post the construction and letting of Pocket 6, Clairwood will comprise approximately 300,000 m² of fully let premium logistics space within a secure, well-located park environment.

Retail update

In its retail update, the company says for the 12 months to October 31, 2025, like-for-like tenant turnover increased by 3.9% compared to the prior period, with tenant sales growth continuing to outpace national consumer price inflation.

From July 1, 2025, to October 31, 2025, the retail portfolio achieved a collection rate of 101%. Vacancies remained low at 0.6% at 31 October 2025, thereby underscoring stable demand and the continued strength of the portfolio.

Asset management strategy

Fortress continues to focus its asset management strategy on maintaining low vacancy rates by improving and diversifying its tenant base. Key additions to the tenant mix include Clay Café at 204 Oxford Shopping Centre and Checkers Outdoor at Equinox Mall.

Furthermore, the company has added new bank branches, with a Standard Bank branch opening in AbaQulusi Plaza, and Absa, FNB and Standard Bank branches established at Sterkspruit Plaza.

Access improvements at several centres have been positively received by local communities, particularly the upgrades and repairs to the surrounding roads at AbaQulusi Plaza and the completion of the new traffic circle at Pineslopes Shopping Centre.

Fortress says it remains focused on serving the commuter market, evidenced by the ongoing development of a new bus rank at Sterkspruit Plaza, along with additional parking to meet increased shopper demand.

A larger ablution facility has been constructed to cater for the higher footfall following the recent expansion of the centre.

The earthworks for the 7,900m² extension of Botlokwa Plaza are underway, and the extension is scheduled for completion in the first half of 2027.

The extension of Tzaneen Lifestyle Centre (25% owned by Fortress) will include an additional 20,000m² of GLA and introduce Pick n Pay, Dis-Chem, and other fashion retailers. Earthworks are underway, and completion is expected during the financial year of 2027.

Sustainability

To date, Fortress says it has 98 operational solar PV systems with a total installed capacity of 35.86MWac, an increase from 96 systems totalling 35.49MWac as of June 30, 2025.

By next year, same time, Fortress aims to commission an additional 20 plants, bringing the total number of installations to 118 and increasing overall capacity to 40.19MWac, it says. 

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