Take-up of industrial space in the Dublin market during the first quarter of 2016 was 23 per cent lower than the long-run average for quarter one, according to the latest research from DTZ Sherry FitzGerald.

This “somewhat disappointing start to the year” follows a bumper year in 2015 when the industrial market staged its strongest performance since 2007.

Take-up in Q1 2016 totalled 59,450sq m (639,914sq ft) and this “weaker performance” partially stemmed from the shortage of prime stock available and this “has had a dampening effect on transaction volumes”, according to DTZ. “Anecdotal evidence would suggest that sentiment and occupier appetite are much stronger than take-up volume reflects,” says the agent.

The largest deal during the first quarter was the lease of the former Uniphar facility at Greenogue Business Park in Rathcoole, Co Dublin. This Grade A unit extends to 9,300sq m (100,104sq ft).

Other notable deals included the sale of a 5,650sq m (60,816sq ft) unit on Lower Ballymount Road in Dublin 12, and the letting of the 4,300sq m (46,285sq ft) Unit 600 Jordanstown Road in Greenogue Business Park at Rathcoole, Co Dublin.

The total quantity of available industrial space stood at 582,150sq m (62,662,044sq ft) at the end of March – down 8 per cent on the previous quarter.

As a result, the vacancy rate declined to 14.3 per cent – down from 15.6 per cent recorded three months previously.

“Supply constraints are set to remain a key feature of the industrial market in 2016, in particular for large Grade A units in prime well-located areas,” according to DTZ. “Grade A vacancy is expected to continue declining in the industrial hubs where demand is strongest. The current development pipeline, while improving, remains very limited. However, expectations are that 2016 will see more schemes break ground.”

Prime industrial rents rose to €81 per sq m (€7.53 per sq ft) in quarter one, up from the €75 per sq m (€7 per sq ft) recorded three months previously. Headline yields in prime locations stood at 5.75 per cent at the end of March.

Occupier demand remains strongest along the N7 corridor/southwest of Dublin, accounting for 51 per cent of the space transacted during quarter one. This was followed by the northwest region which absorbed 32 per cent of all newly occupied space.