By Sir Felix Modebe B.Sc., M.Sc., MBA, FRICS, CCIM, KSJI
Visionary Founder-Leader | N3 CAPITAL AFRICA

Africa’s logistics and industrial real estate emerges as the continent’s top-performing asset class—delivering 12-16% yields (highest among property types), 45-65% capital appreciation (2020-2025), and 18-24% total returns—driven by structural fundamentals: e-commerce explosion (35% CAGR creating 15-25M sqm warehouse requirements), AfCFTA trade facilitation ($350-450B increase requiring 15-25M sqm logistics infrastructure), manufacturing renaissance (import substitution + nearshoring), and persistent supply-demand imbalances (25-50% undersupply major markets) creating scarcity premiums for modern facilities representing only 10-15% of total industrial stock continent-wide.

Structural Warehousing Deficit: Key Market Analysis

Lagos: 25-30M sqm total stock (Africa’s largest), Grade A supply 3-4M sqm (12-15%), annual demand 1.2-1.5M sqm versus supply 700-900K sqm = 300-600K sqm shortage (25-40% undersupply). Vacancy rate: Grade A <5%. Yields: 13-16%. Rental rates: $8-12/sqm/month Grade A. Growth drivers: Lekki Deep Sea Port (2.5M TEU), Dangote Refinery logistics, e-commerce 40% growth.

Nairobi: 8-10M sqm total, Grade A 1.5-2M sqm (15-20%), annual demand 400-600K sqm versus supply 250-350K sqm = 150-250K sqm shortage (30-40% undersupply). Vacancy: Grade A 5-8%. Yields: 12-15%. Rentals: $6-9/sqm/month. Drivers: EAC regional hub positioning, Northern Corridor optimization, e-commerce expansion.

Johannesburg: 40-50M sqm (largest absolute, most sophisticated), Grade A 12-15M sqm (25-30% highest proportion), annual demand 800K-1M sqm versus supply 600-800K sqm = 200K balanced to slight shortage. Vacancy: Grade A 8-12%. Yields: 10-13% (lowest reflecting maturity). Rentals: R60-90/sqm ($3.50-5.25). Drivers: E-commerce 8-10% penetration (highest Africa), renewable energy addressing load-shedding.

Accra: 4-6M sqm total, Grade A 400-600K sqm (10-12%), annual demand 200-300K sqm versus supply 100-150K sqm = 100-150K sqm shortage (40-50% undersupply). Vacancy: Grade A <5%. Yields: 13-17%. Rentals: $8-12/sqm/month. Drivers: Tema Port expansion (2M to 3.5M TEU), oil sector logistics, West African regional distribution.

Cairo: 20-25M sqm total, Grade A 3-5M sqm (15-20%). Yields: 10-14%. Rentals: $5-10/sqm/month. Drivers: Suez Canal Economic Zone (461 sqkm across six zones), automotive/textiles/food processing export clusters, strategic location (40% global trade through canal).

E-Commerce & Last-Mile Demand Driving Transformation

E-Commerce Penetration: 3-5% (2020) → 8-12% (2025) → 20-30% (2030) representing 35-40% CAGR. Space requirements: E-commerce needs 3-4x warehouse space per $ revenue versus traditional retail—$1M online sales requiring 200-300 sqm fulfillment versus 60-80 sqm physical store. Current 8-10% penetration creating 3-4M sqm annual requirement. 2030 projection: 20-30% penetration requiring cumulative 15-25M sqm additional space ($15-30B investment at $1,000-1,200/sqm).

Last-Mile Infrastructure: Urban fulfillment centers (5,000-15,000 sqm) within 10-20km population centers enabling same-day/next-day delivery, dark stores (1,000-3,000 sqm) for groceries/quick commerce 15-30 minute delivery, micro-fulfillment centers (500-1,500 sqm) highly automated supporting ultra-fast 10-30 minutes. Rental premium willingness: 15-25% for location advantages.

Cold Chain Deficit: 10-15M tons annual food loss from inadequate cold chain representing $15-25B economic loss. Modern cold storage requirement: 5-8M cubic meters versus current 2-3M. Investment needs: $8-15B at $2,000-3,000/sqm (2-3x conventional warehouse). Yields: 15-20% net initial (premium to conventional 12-16%) reflecting specialized nature, technology requirements, limited competition.

Manufacturing Nearshoring & AfCFTA Trade Expansion

AfCFTA Impact: Intra-African trade 15% (2020, $200B) → 18-20% (2025, $280-320B) → 25-30% (2030, $550-750B). Incremental $350-450B trade increase requiring regional distribution networks, cross-border consolidation centers, customs facilities—estimating 15-25M sqm modern logistics space ($18-30B investment).

Manufacturing Nearshoring: Pharmaceuticals (70-80% imports → 50% local production by 2030), food processing ($35-50B imports → African value addition), textiles/garments (80-90% imports → manufacturing revival through AGOA, EPAs, labor cost competitiveness), automotive components ($60-80B imports → regional assembly + local parts)—each requiring specialized industrial facilities GMP-certified (pharma), processing plants (food), factories (textiles), industrial parks (automotive).

Industrial Parks: Infrastructure Advantages

Lekki FTZ (Lagos): 16,500 hectares designated, 3,000+ hectares developed, 200+ companies operational (Dangote Refinery, petrochemicals, manufacturing, logistics), infrastructure (Lekki Deep Sea Port 2.5M TEU, dedicated power 1,000MW+, fiber, customs). Rentals: $12-18/sqm/month industrial, $100-150/sqm office. Yields: 12-15% industrial, 10-12% office.

Tatu City (Nairobi): 2,500 acres mixed-use, 500+ acres industrial/logistics, anchor tenants (Unilever, Chandaria Industries), independent infrastructure (power, water, fiber). Rentals: $7-12/sqm/month industrial, $80-120/sqm office. Yields: 11-14% industrial, 9-11% office.

Suez Canal Economic Zone (Egypt): 461 sqkm across six zones, strategic location (40% global trade through canal, 8 hours Europe, 4 hours Middle East), ports, power, industrial facilities. Rentals: $5-10/sqm/month. Yields: 10-13%.

Mature vs. Frontier Markets Comparison

Mature (South Africa, Kenya, Egypt, Morocco): Established industrial base, professional property infrastructure, Grade A supply 25-35% of stock, sophisticated tenants, lower yields 8-13% reflecting lower risk premiums/market liquidity, infrastructure quality.

Frontier (Nigeria, Ghana, Côte d’Ivoire, Rwanda): Emerging industrial development, developing property infrastructure, Grade A supply 10-15% (quality deficit creating scarcity premium), mixed tenant profile, higher yields 13-18% compensating currency volatility/infrastructure gaps/political uncertainties.

Institutional Investor Appetite Growing

Capital Deployment: Pension funds (targeting 10-15% real estate allocation from 5%, $650B continental AUM creating $32.5-97.5B potential), sovereign wealth (NSIA $3-5B, GEPF $4-6B domestic infrastructure mandates), private credit ($15-25B Africa-dedicated funds), REITs (acquisition platforms), insurance companies (liability matching)—recognizing structural growth, stable tenant covenants, inflation-protected escalations, mission-critical nature.

Build-to-Suit Acceleration: Transaction volumes $8.3B (2023) → $26.8B (2026) → $90-130B cumulative (2024-2030) representing 48% CAGR. Pre-leasing eliminating development risk, financing cost reduction 150-300 bps (institutional capital attracted by creditworthy tenant covenants), faster project completion. Sector focus: Data centers ($12-18B investment), modern logistics ($35-50B requirement), healthcare ($15-25B need), telecommunications 5G ($8-12B), banking digitalization ($6-10B).

Strategic Imperatives

Institutional Investors: Increase industrial/logistics exposure 15-25% of portfolios (from 5-8%) reflecting structural growth, superior yield-risk profiles. Focus 60-70% capital established markets (South Africa, Kenya, Egypt, Morocco) providing liquidity/transparency, 30-40% high-growth frontiers (Nigeria, Ghana) offering yield premiums/appreciation potential. Target Grade A facilities with creditworthy occupiers (e-commerce, FMCG multinationals, global logistics, pharmaceutical companies). Balance stabilized acquisitions (8-12% yields) with pre-leased development (12-18% yields on cost).

Corporate Occupiers: Secure strategic facilities through 10-20 year leases or build-to-suit structures avoiding supply-constrained markets where Grade A vacancy <5% limits expansion. Balance cost (peripheral locations 30-40% cheaper) versus operational efficiency (port proximity, highway access, last-mile positioning). Invest adequate infrastructure (minimum 8m clear heights, dock-level loading, climate control, backup power/solar ensuring 24/7 operations).

Developers: Focus pre-leased development eliminating market absorption risk. Partner institutional investors providing 70-85% capital at lower cost than traditional bank financing. Prioritize ESG integration (green building, solar, water efficiency) accessing cheaper financing (50-150 bps savings), tenant premiums (8-15%), valuation enhancement (15-25%). Target quality deficit markets (Lagos, Nairobi, Accra) with structural 25-50% undersupply.

Industrial real estate emerges as Africa’s top-performing asset class delivering 18-24% total returns through structural fundamentals creating sustained demand outpacing constrained supply. 2026-2030 defines winners—investors recognizing transformation, occupiers securing strategic facilities, developers delivering quality supply—capitalizing on once-in-generation African industrialization creating permanent portfolio advantages.