There was a strong rebound in the Dublin industrial market in the second quarter of 2014, according to the latest research from DTZ Sherry FitzGerald.
It reports that some 62,900sq m (677,049sq ft) of space was transacted in Q2 – almost double the activity in Q1 – bringing the volume of industrial space transacted so far in 2014 to 95,000sq m (1,022 million sq ft).
This is down on the same period last year in terms of the volume and number of deals transacted, however.
Two significant deals boosted the figures in Q2, including the purchase of the Gateway site – formally the SDS distribution facility, at Newlands Cross, Naas Road, Dublin 22 – by Hibernia REIT for a reported €10 million.
The other significant transaction was the sale of Unit 41-44 at Robinhood Industrial Estate, Dublin 12 while the biggest letting during the quarter was for 1,600sq m (17,222sq ft) at Unit 8, Cookstown Industrial Estate, Tallaght, Dublin 22.
Increased confidence in the sector, according to the agency, is translating into deal- making, with some 122,250sq m (1.316 million sq ft) under offer at the end of June, compared with 73,800sq m (794,375sq ft) for the corresponding quarter in 2013.
This confidence comes from improving underlying economic fundamentals and a strengthening manufacturing sector, the agency notes.
Changing dynamics
“The purchaser dynamics of the market are changing, with investor demand increasing substantially in recent months,” said
Brendan Smyth
, head of industrial at DTZ Sherry FitzGerald.
“Funds, reits and private investors are increasingly targeting not only properties with an existing tenant but also good quality vacant properties in excess of 4,000sq m (43,055sq ft). Investors are facing competition from owner-occupiers seeking to take advantage of the capital gains tax exemption window before it closes at year end, resulting in upward pressure on capital values.”
Vacancy rate
Supply levels, however, have yet to show a definitive peak.
At the end of June, the total quantity of available space stood at 1,149,400sq m (12.372 million sq ft), down just 1 per cent on the previous quarter. This left the vacancy rate at 28.3 per cent.
Elsewhere, DTZ reports that Cork’s industrial market “outperformed expectations with an exceptionally strong level of activity recorded in the second quarter”.
Take-up in the city came in at 13,200sq m (142,083sq ft) with a vacancy rate of 17 per cent. The Limerick and Galway markets saw activity weaken during Q2, however.
A notable feature of regional markets is elevated supply levels. With the exception of Galway, vacancy rates remain at historic highs yet there is a diminishing stock of large, Grade A space.
“A potential occupier with a requirement for a Grade A unit greater than 10,000sq m (107,639sq ft) faces limited options across all of the cities,” notes DTZ.
“Construction remains stagnant across all the regional centres with no development activity at present.”
