Inospace / Enterprise Africa

INOSPACE

INOSPACE

Inospace and Fortress Combine

to Form Last-Mile Logistics Leader PRODUCTION: Eleanor Sarbutt-King

Inospace is South Africa’s leading operator of serviced logistics parks providing a unique range of innovative industrial, storage and office spaces. After completing a R1.25 billion transaction with JSE-listed Fortress REIT, Inospace has grown its assets under management to R2.5billion. www.enterprise-africa.net / 3

INDUSTRY FOCUS: PROPERTY

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Logistics and warehousing real-estate has emerged as a high growth sector across the African continent with investor appetite for industrial stock across, attracted to the sector’s strong income profile and positive market fundamentals such as rising urbanisation levels driving demand for urban logistics facilities.

Occupier demand is increasing unfettered across the continent, as the traditional agricultural utilisation is joined by the FMCG and manufacturing sectors to result in a substantial boost for warehouse requirements.

One of the key drivers behind prime warehousing needs is the penetration of e-commerce, already on the rise

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pre-Covid with online sales revenue has increased by over 28% to $27 billion in 2020 compared to 2019 across Africa.

This uptick in online retail sales shows no signs of abating, with e-commerce revenue expected to almost double to $46 million by 2025.

FLEXIBILITY AND EFFICIENCY In just five short years Inospace, a portmanteau of ‘innovation space’, has recently acquired its fourth logistics park in a swelling portfolio of industrial assets ranging in size from 10,000 to 50,000 square metres. Behind its formation was the realisation on the part of CEO Rael Levitt that industrial real estate, traditionally the poorer cousin of the real estate market, had the

very real potential to become the most robust of all property sectors due to the fact that technology was speeding up the need for logistics warehousing.

“We trialled the idea at one park in Cape Town, which was a success, and after further delving into other frameworks in the UK and Germany we settled on our model and rolled out from there,” Levitt reveals, as he delineates to us how the Inospace idea was borne of his deep dive into real estate models around the world during his studies at both UCLA and the National University of Singapore.

“I came to the realisation that when it comes to offices as a real estate asset class technology was going to be hugely impactful,” he adds,

INOSPACE

// WE INVEST IN STRATEGICALLY LOCATED SERVICED LOGISTICS PARKS THAT PROVIDE A RANGE OF INDUSTRIAL, STORAGE AND OFFICE SPACES IN ONE LOCATION// “and this was true to an even greater extent in the case of retail, with the rise of Amazon and home deliveries and the resultant ‘ghost malls.” All of these physical goods being ordered and shipped, Levitt knew, have to go through some form of warehousing be it manufacture, assembly, or delivery, which knowledge - after tireless and indepth study and observation - led him ultimately to founding the company.

Very much at the root of the original concept was the provision of unique industrial, storage, and office spaces in one environment with a range of benefits and appealing value-adding services. “We offer flexible spaces to suit all business needs,” Levitt proclaims, which has allowed Inospace to rapidly take its rightful place as the most innovative owner and operator of multi-let industrial parks in South Africa. “Inospace has emerged as a logistics property sector specialist,” Levitt states, “leading the transformation of multi-let industrial real estate into a choice asset class.

“We invest in strategically located serviced industrial properties that we reposition into serviced logistics parks that provide a range of industrial, storage and office spaces in one location, uniquely branded parks that offer more than just space and are overlaid with a suite of added value services and facilities,” says Levitt

“In all that we do and offer, we never stray from putting our clients first and we are known for making sure to always go out of our way to assist wherever we can; all our spaces, services and systems are dedicated to helping our clients do business better.” Very much in this vein, Inospace’s logistics parks are geared towards creating the absolute best environment to allow a business to thrive, Levitt relates.

“Our space-as-a-service offering combines facilities and services to make life at our parks more efficient, convenient and stress-free, and as such we strive to allow the full focus to be on what matters most - running the business.”

LANDMARK PARTNERSHIP Inospace’s offering has long been most heavily geared towards SMEs, Levitt adds, which he attributes to his company’s own entrepreneurial spirit favouring spaces designed to help small and medium businesses innovate, grow, and prosper. Partnering with Fortress REIT, one of the largest listed property groups on the JSE with an asset base totalling over R40 billion and a primary focus on logistics, retail, and investment properties in South Africa and Eastern Europe, will allow Inospace to do this on a monumental scale. While it eclipses anything that has come before, this is set to be a longstanding and fruitful association.

Rael Levitt - CEO

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INDUSTRY FOCUS: PROPERTY

“The best way we have found to grow the business has been through acquisitions, which meant that we had already engaged with Fortress in the past as a potential purchaser of some of their industrial parks in South Africa,” says Levitt. “Prior to Covid, we decided to run a two-year pilot with firstly one, and then a second of these parks, which were successfully repositioned into the serviced business and micro-logistics parks Wadeville Works and Electron Exchange.”

Through the newly-christened Inofort, the landmark deal will launch with an initial portfolio of twenty industrial properties in Cape Town and Johannesburg and will offer a combination of warehouse, logistics, storage and workspace at an initial valuation of R1.25 billion. Fortress has contributed twelve multi-let assets, with Inospace contributing the balance in a combined portfolio

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spanning a total lettable area of 200,000m² with over 600 tenants.

“It’s a major milestone for Inospace and marks our involvement with the listed real estate sector, acquiring an established portfolio of assets, a partial exit for shareholders and a new partner in one transaction,” Levitt outlines.

“This partnership is perfectly aligned with Inospace’s long-term strategy and we now will grow and succeed together with Fortress combining management skills to manage and grow Inofort. This complementary approach means greater synergies between our teams, and we are already seeing the fruits of the growing relationship.”

10 parks are already branded as Inospace, and over the next eighteen months, the remainder will be repositioned and refurbished including a range of logistics solutions prioritising last-mile delivery. “A new range of amenities will be introduced

to the parks to assist SMEs with last-mile logistics including rigging and lifting equipment, handling apparatus, packaging materials, waybill printers and an online courier and shipping platform,” Levitt details.

“Our collaboration with Fortress represents a significant opportunity for both companies, and the Inospace team is excited about being able to grow our footprint and enhance our value-adding

// THIS PARTNERSHIP IS PERFECTLY ALIGNED WITH INOSPACE’S LONGTERM STRATEGY AND WE NOW WILL GROW AND SUCCEED TOGETHER //

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customer offering as a result.” A key part of an overall three-year strategy to grow Inospace into a R5 billion company, there are far wider concerns at the heart of this collaboration, according to Levitt. “We believe that it is vital to provide facilities for SMEs in the South African context, where we have record unemployment; this concept of enlarging and emerging business is a critical way to grow the economy.

“This is our greater purpose, creating employment and assisting and growing small businesses while growing ourselves into a R5 billion property fund and creating something truly innovative, before then taking the model to new and exciting territories.

“We are poised for growth,” Levitt summates, “both organically and by acquisition, and are uniquely positioned to take advantage of growing demand for our on-trend offering in this rapidly growing globally recognised real estate niche.”

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June 2022

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