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Industrial take-up for the year-to-date is already at 1.532m sq ft and is therefore set to exceed the total for 2011 of 1.539m sq ft for this year
Industrial take-up for the year-to-date is already at 1.532m sq ft and is therefore set to exceed the total for 2011 of 1.539m sq ft for this year. This is positive for the industrial market which has experienced significant difficulties over the last few years with falling rents, limited demand and drops in sentiment and confidence. The strong take-up in Q2 and Q3 have helped increase year-to-date take-up levels after a weak start to the year, when take-up totalled only 0.281m sq.ft. A total take-up level of 0.656m sq.ft. for the quarter is healthy for a market of this size, and is now up to more sustainable levels.
The following trends have been identified from the analysis this quarter: . We are beginning to see real evidence of a stabilisation in rents which now stand at Euro 5.50 per sq.ft. for prime and Euro 3.00 - 4.00 for secondary. There is evidence that in some locations (north east and south west Dublin geographies) rents up to 10% higher than this are being achieved. Activity outside of the greater Dublin market looks set to remain exceptionally weak with limited deals over the last 6 - 12 months. Reversing the trend from previous quarters, take-up was greater for secondary stock instead of prime stock this quarter. This is due to a reclassification of the definition in prime stock, which is adapting to more modern requirements. The trend of 'predatory purchases' which began to emerge 12 months ago has continued and we believe this will remain in the short to medium term for high profile and / or well-located properties. There seems to be demand for larger distribution facilities from existing large occupiers who are looking to minimise costs by rationalising their operations. We expect a number of factors such as business consolidation, market failures and improvements in supply chain management to be driving this trend
Hannah Dwyer, Research Analyst stated that "from a statistical perspective, data shows that the industrial market is improving with increased levels of take-up from last quarter. It is also positive to see that take-up for the year is on target to exceed levels achieved for the whole of 2011. Based on the year-to-date results, we are hopeful that take-up for 2012 will be approximately 20-30% greater 2011, which will push it close to 2m sq.ft. for the year".
Nigel Healy, Director of the Industrial Department added, "while undoubtedly market conditions remain challenging (and are likely to remain so in the short-to-medium term), there appears to be some recognition that 'life must go on' in the sector. Although statistics are healthy for the quarter and year-to-date, on the ground, conditions still remain challenging, with one of the toughest challenges being lengthy time periods between initial enquiry and deals signing. However, it is encouraging that there seems to be an improved volume of enquiries for larger quality distribution facilities, which will not just help boost take-up figures, but with limited availability of quality product of this size category, is likely to create competition in the market and may cause some rents to increase further".
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