Availability of space in the Dublin industrial market rose over the first half of 2017 to stand 10 per cent above the same period last year while take-up over the first six months of the year was 24 per cent below the long-run average.
This is according to the latest review of the sector by agent Cushman & Wakefield. Its chief economist and director of research Marian Finnegan says the findings "would suggest that grade A availability appears relatively high at present" but the majority of these units are small in size and "it is arguable to assume they fail to meet some requirements of those seeking space".
As a result, the review suggests that rental activity “continues to be restrained by a lack of available units which meet the requirements of potential occupiers” as renters emphasise that “there is a lack of product, in contrast to what the headline statistics would suggest”.
Nevertheless, occupier activity in the industrial sector has been disappointing over the past six quarters. The opening six months of 2017 saw take-up reach just 130,000sq m (1.399 million sq ft) across 85 deals.
Large transactions
Furthermore, take-up in the second quarter was boosted by three large transactions: 11,350sq m (122,170sq ft) at the HQ Manufacturing Premises at Belgard Square in Tallaght; 9,200sq m (99,028sq ft) sold at Belgard House at Belgard Square in Tallaght; and the occupation of a newly completed design-and-build facility of 6,100sq m (65,660sq ft) for Holland & Barrett at Dublin Airport Logistics Park.
Cushman & Wakefield puts the quantum of space available at 647,550sq m (6.97 million sq ft) while the net availability of Grade A space stands at 243,600sq m (2.622 million sq ft) – that's 44 per cent of all net available properties in the Dublin market – and 50 per cent of these available units measure below 1,000sq m (10,764sq ft) with a further 39 per cent below 5,000sq m (53,820sq ft). In addition, some 36 per cent of the total net available Grade A units have been vacant since before 2016.
Limited development
The review suggests that prime headline industrial rents edged marginally upwards during the second quarter to stand at €82 per sq m (€7.62 per sq ft). “The shortage of quality space and limited speculative development, although showing the first sign of improvements, is likely to maintain upward rental pressure for the remainder of the year, to reach €88-€90 per sq m,” says Ms Finnegan.
In terms of development activity, some 127,800sq m (1.375 million sq ft) of industrial space was under construction in Dublin at the end of the second quarter – an increase of 8 per cent over the first quarter.
“Importantly,” says Ms Finnegan, “quarter two saw the start of four speculative builds at Horizon Logistics Park, which combined will provide 15,350sq m of space. This is the highest volume of speculative space under construction since development activity returned to the market in 2015. Due for completion in 2018, the units provide some alleviation to supply constraints in the northwest. However, it is hoped that further speculative builds will commence.”
