Redevelopment Of Redundant Industrial Buildings

Property investment as a whole has always been a preferred vehicle as one of the 3 pillars of ones’ investment portfolio in conjunction with stocks, bonds and cash derivatives. Some investors still prefer tangible investments even if the yield is slightly lower than alternatives.

In some instances a new investor will learn by trial and error of some pitfalls and pertinent information that may have assisted in their decision making processes.It is for this reason that we will attempt to keep our clients informed of issues that are regularly debated in our travels as commercial and industrial property brokers.

THE CONTAINER ACCESS DEBATE:

As the logistics industry is an organic concept and grows and changes to adapt to convenience and demand, it stands to reason how functional ability of industrial property is integral in the decision making process of a prospective tenant.

The number one criteria in the decision making process is the ability of the property to cater for access, loading and offloading of container type vehicles. This is understandable as the box or container is an internationally used mode of cargo handling.

If we consider the port as a separate animal altogether with its rules, regulations and restriction criteria in terms of leasehold ownership, we will need to focus on the freehold property falling within the acceptable perimeter of the harbour surrounds for our discussion.

The Umbilo and Congella Industrial Sector:

The demand for space is a byproduct of consumption. In the1980’s, the Umbilo area had multi-directional traffic flow on Gale Street, Umbilo and Sydney Roads which was considered in the access design for most properties and is noticeable by the curves of some building facades facing in the wrong direction to conventional traffic flow. This has adversely affected the loading/offloading and parking facilities of many properties. The changeover to container trucks as a preferred means of transport from the previously used rail system has created a surge in traffic congestion which is evident in Bayhead Road and South Coast Road at specific times of the day.

It has become acceptable to most, to offload containers on the street in proximity to their premises as most older properties are overbuilt in terms of their coverage, thus preventing the circulation required to handle container cargo on site.

The solution:

If we consider the rental rate being charged to house your logistics enterprise in the new River Horse Valley sector or within the leasehold sector of the port, it is acceptable to pay a reasonably elevated rental rate per square meter for a newly built structure incorporating a circulation configuration on the site for container traffic and loading/offloading facilities.

With this in mind, to be closer to the port should command a premium for location as it is evident in the cost to the consumer of freight transportation in accordance to the zones allocated by the logistics industry.

Let us look at a hypothetical scenario of a 3 storey building in Umbilo situated on a 2000 sqm site and built to cover the entire site. Allowances have not been made for building lines etc.

Scenario 1:
Assume
Ground floor – 2000 sqm at R35/sqm
First floor- 2000 sqm at R16/sqm
Second floor 2000 sqm at R12/sqm

Thus our 2000 sqm site ( as land ) is generating R63/sqm in rental.
It is clear from this exercise that this site would be close to R115/sqm if a build cost of approximately R 4000 per sqm was estimated for a new structure as the services are already on site. Thus a non-viable option.

Scenario 2:
Assume
A single storey structure of 1000 sqm on the same 2000 sqm site
Ground floor 1000 sqm at R35/sqm

Thus our 2000sqm site is generating R17.50/sqm

If we rebuild a 1500 sqm facility at R4000 per sqm and assume it needs R40/sqm to service the funding and add our initial loss of R17.50/sqm, we can enter the market with a brand new facility with container access at about R 57.50/sqm and probably still have a good choice of tenants due to the location needs as stated above.

This exercise is merely a scenario to show that the conventional search for properties which produce percentage returns on investment are not the only opportunity that exist for the property investor. It would be essential however to consult with an accountant to identify the additional benefits of depreciation and capital expenditure for a development of this nature as well as holding costs once the sale and rebuild clause in a lease agreement has been initiated.

The Problem With Asbestos in Industrial Buildings

Now that the dangers to human health of asbestos exposure are widely known and reported it is likely that the owners of buildings with such roofs will want to prevent asbestos fibres escaping as the roof deteriorates. This can be done safely by sealing them with specialist products or cladding them with metal.

In fact, removing roofing material that is in good condition may pose a greater risk to health than sealing or cladding because the asbestos fibres (or dust) will be released as the sheets are broken up for removal.

It should be mentioned that asbestos comes in several forms – some of which are extremely hazardous to health and others much less so. Reports of the dangers of asbestos do not always make this distinction clear. White asbestos was most commonly used in asbestos cement for industrial roofing; it is less of a health hazard than other forms and, additionally, the asbestos fibres are encapsulated in the cement. Brown or blue asbestos on the other hand poses an extremely serious risk to health and can lead to asbestosis, mesothelioma or cancer.

So an undamaged roof made from asbestos cement sheets does not pose an immediate risk but the problem with roofs is that they are very often not easily accessible to check for damage so a building owner or manager may not be aware of a gradual deterioration in the state of the roof. It may only be when a building is sold to a new owner or re-let to a new tenant that a survey indicates the presence and condition of asbestos.

A common problem with asbestos roofing as it ages is that the sheets can crack. Indeed, finding out there is a problem with asbestos can often manifest itself initially as a leaking roof. But the question many building owners are concerned with is how long can they expect an asbestos cement roof to last?

The life of a roof naturally depends on various factors and it is impossible to give an exact figure because the expected lifetime can be affected by the position of the roof, the quality and type of the original workmanship, whether it has been well-maintained and many other factors. But in general an asbestos cement roof could be expected to last for 25 – 30 years in ideal conditions.

But this might not be a reasonable expectation for a roof exposed to extreme weather conditions that has been poorly maintained or repaired in the past and every roof should be viewed as an individual case. There is nothing to be gained from simply assuming it will last for 25 – 30 years; an inspection by an asbestos roof repair specialist is the only way to be sure of the condition of your industrial roofing and to obtain an accurate estimate of its life expectancy. If the asbestos roofing sheets are found to be damaged then sections of the roof, or maybe even the whole roof, will need to be encapsulated by sealing with a specialist product such as Fibroseal. For roofs in a very poor condition complete removal and replacement may be the only option.

The Mining Industry Builds Up Smart Solutions

The present-day mining industry provides large-scale possibilities for the latest automotive and connective technologies to be tested out.

It goes without saying that the process of recovering the planet’s natural resources is hard. Apart from being difficult, it can be environmentally damaging. In these circumstances human safety is of top priority. It is provided by such IT revolutionary systems as: ‘extreme Wi-Fi’ that is able to cover vast deserts; autonomous vehicles that deal with extracting vital minerals and rocks without the need for operator action; smart communications that warn employees if they get close to gigantic machines and much more. The experts in the field believe that the potential of these systems will help to achieve the ambitious goal of the fully autonomous mining site, where the actual presence of humans is not required.

Smart mining premises

All the leading manufacturers of mining machinery are currently developing the best autonomous practices to increase efficiency and productivity, reduce cost, and lower emissions without sacrifice of safety. By using connectivity and valuable data analytics they develop the optimal dig patterns at the coalface and enable the vehicles of exact autonomous routing. Mining has become the mutual combination of big industry, big data and big money.

The underground IoT provider

One of the most ingenious contributions to smart mines so far is the Smart Rockbolt. Basically, this is the device that creates an underground Internet of Things. The global mining industry uses 100 million of bolts every year. These tools are used to prop up walls and ceilings during dynamiting. The concern is that they are rather susceptible. Being damaged, they lose their load bearing capability. As a result, there is the risk of deadly collapsed tunnels and cavities.

The innovative Smart Rockbolt was designed at Lulea University of Technology in Sweden and has an impressive list of virtues. It is equipped with sensors that measure vibrations and strain. When linked to 4G or Wi-Fi it empowers a mesh network with the might of a 24/7 safety monitoring system. What is more, a single non-rechargeable battery cell is able to run for years.

The art of geofencing

Geofencing technology serves to keep workers away from dangerous equipment. It is integrated with various microclimate monitoring systems, which benefit from sensors that measure humidity, temperature, sound and gas levels in the area. In case of any problems mining workers and engineers receive the corresponding text messages on their phones. Employees can get warnings not to enter an area because the air quality is not satisfactory or because there is heavy machinery working. A worker also can send an alert to the control center when they are in need of assistance. Another important value of the technology is that it can give real-time feedback on the physical condition of workers (e.g. blood pressure, heart rate, etc.) by means of special wearable devices.

The ultra-reliable Wi-Fi

To guarantee successful remote operation, the connectivity should be just flawless. But in case of the open mines somewhere in high mountain ranges the task demands a lot of effort. Sometimes, the environmental conditions are so tough, that for electronics it’s like going to Mars. But there is such advanced networking equipment with ruggedised routers that allow remote mining and construction workers to take advantage of the so-called ‘extreme Wi-Fi’ everywhere they go.

The need for 5G

Providing reliable connectivity that is flexible and durable enough for underground mining operations is quite a challenge. To arrange the work of autonomous mining machinery on a regular basis, the connectivity should be of no less than the 5G standard. Telecommunications equipment companies have already launched the projects that aim at investigating how to remotely control monster-like vehicles. For this reason, distributed radio networks with carefully arranged antennas are being set up in the mines to deal with the long underground tunnels and rough walls.

Mine of the future

Autonomous haulage around the mine is not a dream, but the reality that is tested nowadays at the Pilbara iron ore mine in Western Australia. The concept under the big name ‘Mine of the future’ is being realized with the help of 69 partially autonomous trucks. Other outstanding plans include automated drilling and even a fully autonomous long distance railway to get the ore to market.

In the near future a fully remote control over dump trucks is planned to be ensured through an electric steering module, installed between the steering wheel and valve. Moreover, the trucks will use data from the on-board sensors, as well as digital maps that will help to navigate around a mine and identify an exact location for dumping.

Great Expectations

Alongside big behemoths in the form of haul trucks, there are smaller versions of transportation trucks in the form of tippers that are also used for bulk cargo haulage around a mining site. Autonomous transport solutions for construction sphere have become one of the prime concerns for Swedish automotive manufacturers. Thus, Scania tippers represent the company’s ongoing commitment to profitability and sustainability. As an initial result, two collaborating construction vehicles from Scania have already demonstrated its self-driving abilities. A distinctive feature of the project is that its final goal is not to take away the need for human intervention but to make the driver to be a key player in proficient autonomous transporting and dumping solutions.