Redefine Properties is accelerating an expansion into the logistics space in Poland and at home, its chief executive officer said after the company reported a 62.7% decline in half-year headline earnings on Monday.

Redefine is positioning itself to benefit from rising demand for logistics facilities driven by a boom in online shopping in fast-growing e-commerce markets of Poland and South Africa as vacancies in its office portfolio rise.

Redefine’s total property assets under management are valued at R75.3 billion, with 84% invested in South Africa. Of the 16% held offshore, 81% is in Poland.

In Poland, Redefine has logistics developments of 173,240 square metres under construction, which will push its European logistics portfolio's gross available area to just shy of 800,000 square meters, CEO Andrew König said during a media briefing.

Polish cities boast some of Europe's cheapest warehousing costs, with low labour, electricity and diesel costs also making them attractive, he said.

"So not only does e-commerce and distribution drive expansion opportunities in the Polish logistics area, but similarly the cost is very compelling which will similarly attract a lot of activity going forward," König said.

Significant land holdings in South Africa in strategic locations like Cape Town and Johannesburg will also be harnessed for local logistics developments, he added, with one already in progress.

OFFICE SECTOR WILL STILL BE VOLATILE

The owner of retail, office and industrial properties reported a 30.8% slump in total revenue in the six-months that ended Feb 28, due to asset disposals and rental relief of 107.3 million rand granted to its tenants.

Vacancies in its South Africa office portfolio, its second-biggest, rose to 14.6% from 13.8% and it reported a rental renewal reversion rate of negative 4.4%.

A rental reversion rate shows whether expiring leases that were renewed recently had higher or lower rental rates than previously. A negative rental reversion rate confirms that lower rental rates were secured.

Chief Operating Officer Leon Kok said there are big office tenants in Sandton - Johannesburg's financial district - that are looking to sub-let big chunks of their space. The company will work with tenants looking either to shrink or expand their office space, he said.

It is also exploring a co-working and satellite office solution to compliment conventional leasing, multi-use space that incorporates retail outlets and is investigating conversions to self storage units as an alternative use for suitably located vacant buildings, Kok added.

"It's not yet clear how the workforce will settle; one thing we are certain of is that we cannot see that a 100% work from home office environment is sustainable," Kok said. ($1 = 0.8221 euros) ($1 = 14.1533 rand)