The South African property market’s news headlines have recently only contained negative reports of the market coming to a standstill amidst a very slow economy and political uncertainty. Despite these reports, however, great property deals are still being concluded, one of which was recently brokered by Ikon Property Group Director, Jerri Mperdempes.
A 12-year lease agreement has been concluded with Wright Millners, the biggest dental distribution company in Africa, The 4 900 square metre industrial warehouse facility is located in the recently established Atlantic Hills Business Park in Cape Town. So, how do these types of deals come about and are there are any winning formulas to follow? We sat down with Jerri to get some insight.
We consistently read so many negative reports about the SA property industry slump and especially pre-election, there seemed to be very little movement in the market. The deal you have brokered is therefore significant in very tough economic conditions. Could you share your thoughts on why this specific lease agreement was successfully concluded?
The market is tough, however, there are still businesses that have found their niche and continue to thrive and grow. Wright Millners has sound business principles, managed by a small and tight-knit team, who continue to drive growth and achieve results locally and internationally. The conclusion of this lease is testament to their success.
You acted on a sole mandate from Wright Millners, which is a great position to be in for any deal maker, while also being favourable for the client, who only deals with one person. What would you say are the key elements to securing not only business, but repeat business in this manner?
Personally, I don’t believe that there is a set recipe that determines this kind of business approach. It’s a combination of a few factors, of which some ingredients would include having a vast understanding of the market and having a passion for your client’s requirements and their business. The combination of experience and market knowledge, together with a clear vision of what the best outcome looks like for your client, has proven to be a successful approach.
A 12-year lease agreement is not a timeframe commonly used. What were the benefits for the parties of agreeing to such a long-term commitment?
The main reason behind the long-term commitment was the unique opportunity of a brand-new world class facility being available and a growing business that requires a well-located facility, which could also be a flagship for them. The 12-year lease period allowed for a very well-priced rental, as well as a considerable fit-out allowance, which allowed for a bespoke installation, specifically designed for the manufacturing of highly specialised products for the dental industry.
In terms of concluding these large corporate negotiations, what are a few things you believe is important to get right?
The relationships that get forged in the process of doing a deal, is the most important aspect. This is true not only of the relationship between the broker and the tenant, but more importantly between the tenant and landlord. If a broker is able to facilitate this relationship with care, the foundation is set for positive outcomes.
Let’s not forget about price! Negotiating a good financial deal remains vital. For a business, one of the biggest expenses is accommodation and the maintenance thereof. Therefore, if the deal concluded is well-priced and the product of superior quality, it’s a further invaluable contribution.
If you had a crystal ball, what would your predictions be for the South African and specifically the Cape Town market for the next 12 months?
In my opinion, the industrial sector in Cape Town will continue to do extremely well in relation to the rest of the country, simply due to the consumer base growing rapidly, resulting in logistics requiring support this growth. I also believe that it’s the only sector that will see a lot of growth. My outlook on the other sectors of the market – office, retail and residential – are that they will continue to be slow. That being said, there are always opportunities out there, you must just be sure to remain on the lookout for them.