Vacancy rates for industrial space in Dublin will continue to decline this year following a record
take-up in 2013, according to Savills Ireland.
The agents said total take-up in the fourth quarter of last year was about 89,000sq m, the highest quarterly take-up recorded in Dublin in the past five years.
Five of the agent’s top 10 deals completed in 2013 were done in the last quarter of the year. These included the sale of the former Olhausen facility in Blanchardstown and the sale of the former Omega Teknika plant in Finglas.
Savills said the manufacturing component of gross domestic product, which is a critical driver of the demand for industrial space, increased by 2.1 per cent in the year to September. As a result, the market for industrial property strengthened throughout 2013, and culminated in a total take-up figure of 274,000 sq m for the year.
Retail sales
This is a new record for the Dublin market and is 45 per cent higher than the 2012 total and 87 per cent up on the figure for 2011.
In addition to the improvement in Ireland’s manufacturing performance, more recent figures show retail sales are now also bouncing back. According to Savills this will add further to the demand for warehousing space.
“Employment and household incomes are now rising, and this is feeding through to the tills with a 3 per cent uplift in retail turnover in the 12 months to December. In turn, this is creating additional demand for logistics and distribution space,” Savills director of research Dr John McCartney said.
Despite increased demand, capital values for industrial space remain at low levels. Savills Ireland industrial director Gavin Butler said this had led to a rise in the number of buildings being bought outright rather than let.
“With market prices currently running at around half the cost of developing buildings, it has never been cheaper to buy industrial property in Dublin. As a result, sales increased from 20 per cent of market transactions in 2012 to 47 per cent last year.”
Mr Butler said low capital values are also hindering new development of industrial buildings, and this will result in the market continuing to tighten in 2014.
“With demand increasing and no new supply in the pipeline, we expect vacancy rates to continue falling in the medium term. In particular, we are likely to see a shortage of good-quality accommodation over 1,000sq m in prime locations which should lead to an up-tick in values for this type of product as the year progresses,” Mr Butler said.
