Skip Ribbon Commands
Skip to main content

News Release

Dublin

Industrial Take-Up likely to reach 2.5m sq.ft. this year


Industrial take-up for Q3 2013 has continued to perform strongly with over 770,000 sq.ft. of industrial space transacted across  37 deals. This is a 16% increase on last quarter, and was boosted by 5 large transactions greater than 40,000 sq.ft. In the year-to-date, there has been 1.99m sq.ft. transacted which is a 7% increase on the same point last year.

Supply for prime product in certain locations continues to tighten. Shortage of product depends on the location and the size category. In some instances, there have been several interested parties competing for a prime building that comes onto the market. This has caused some rental increases, but generally prime rents are between €5.50 - €6.00 per sq.ft. On the other side of the equation is secondary space, where there is an oversupply of product. Although some occupiers are showing a preference for cheaper space whilst values are so low, there is still a significant level of vacant older stock on the market. In some cases this is obsolete in its current condition, and whilst rents still do not make economic sense, they are likely to remain vacant for the foreseeable future.

Hannah Dwyer, Head of Research said that “With strong levels of take-up which have exceeded 500,000 sq.ft. for each of the last 3 quarters and given that year-to-date take-up has already hit the 2m sq.ft. mark, it is possible that total take-up for 2013 with hit and possibly exceed 2.5m sq.ft.. This would be a significant milestone for the industrial market and would be the highest take-up level since 2008”.

There is a very clear divide in the market, with prime continuing to perform steadily in terms of take-up,  rental stability, and land sales and secondary and tertiary stock struggling somewhat in comparison. Although decreasing choice in some locations has caused an uplift in secondary activity this quarter, demand from larger occupiers is likely to remain focused on prime space, with increasing competition expected for key buildings and sites. This is likely to cause further tightening of supply and in some cases depletion of certain size categories in key locations, which in turn may cause some further level of rental increase. In the medium-to-longer term, this will also have to drive development activity in order to meet the strong demand from occupiers.

Nigel Healy, Director of Industrial Agency said that: “While I would not like to over-hype the improvement in activity, it is encouraging that the levels of take-up have remained reasonably consistent over the last 6/7 quarters. Undoubtedly, there will be significant challenges ahead, but the complete absence of any new stock will have to underpin upward pressure on rent. The reality is that a new build will have to achieve broadly €10 per sq.ft. to look like real value”.