Port Tunnel: The opening of the Port Tunnel will boost demand for industrial land and buildings in north Dublin, says Gavin Butler.
The opening of the Dublin Port Tunnel (DPT) in spring 2006 is having an impact on industrial values on the northside of Dublin.
This increased level of activity is likely to accelerate over the next 12 months and the tunnel will shift the focus of Dublin's industrial market from the west to the north of the city in the medium to long-term.
The DPT is arguably the most important infrastructural project in the history of the State. It will have a dramatic impact on noise levels and congestion.
The primary purpose of the DPT is to remove port-related heavy goods vehicle (HGV) traffic from the city centre by providing quality access between the M50 and Dublin Port. The DPT will also relieve congestion in other areas through utilisation of its remaining capacity for non-HGV traffic.
The DPT is a 5.6km dual carriageway including 1.9km of twin cut and covered tunnel and 2.6kms of twin bore tunnel. It comprises two tubes, each around 11 metres in diameter. Each tube has two traffic lanes.
On opening, some 9,000 HGVs will be removed from the local road network in Dublin each day. Traffic flow in the tunnel is projected to be 20,000 vehicles per day in 2006 rising to 31,000 vehicles in 2018. Travel time from the Port Tunnel entrance at Santry to Dublin Port, which can take up to one hour on the N1, will be seven minutes. There will be no toll charge applied to HGVs using the DPT, but cars will pay a premium rate at peak hours and a standard charge at off-peak times.
The reduced travel time to Dublin Port from the M50 will help the development and attractiveness of Dublin Port resulting in shorter, more reliable delivery times for business and industry.
Many companies occupying industrial space in Dublin access the port on a daily basis. A reduction in travel times to and from the port will increase profitability and improve competitiveness for logistics, transport, manufacturing and distribution companies.
A stringent enforcement strategy will have to be undertaken by Dublin City Council to ensure that the tunnel is effective in its objective. A decision has yet to be made in this regard, but a number of options are under consideration. These include: time restrictions on access within the canal cordon; restrict HGV access within the canal cordon to permit holders only; and HGV tolling at the canal cordon.
Regardless of which enforcement strategy is applied, companies within close proximity of the tunnel entrance will have a competitive advantage. They will have toll-free access to the port and time- and fuel-efficient means of accessing the port.
Companies from the south or south-west of the city will face tolls at the West Link or the canal cordon. These charges and time restrictions will impact on operating costs and will make some companies more competitive than others because of their location on the northside of Dublin.
With the airport and recently opened M1 extension to Drogheda, the northside of the city already has much to offer occupiers in the industrial market. But the opening of the DPT next year will create competition amongst occupiers for land and buildings to give them access to the DPT and thus a competitive edge over rivals.
Areas already benefiting from the new infrastructure include Santry and Clonshaugh, both are situated at the entrance to the tunnel. At Clonshaugh Industrial Estate, vacancy rates have plummeted over the last 12 months. A recent transaction on the estate was the sale of the 30,000sq m (322,917sq ft) former Gateway facility for €16 million at the end of last year. This had been vacant for almost three years at which time there was around 100,000sq m (1,076,390sq ft) of space available in Clonshaugh. This vacancy level stands at 20,000sq m (215,278sq ft) today.
There are a number of older industrial estates within close proximity of the tunnel entrance which have potential for significant capital growth. Values on these older estates had been hardest hit when the industrial market weakened in 2002 and 2003. Many units have been available on these older estates for months and are available at good value to purchasers.
These estates include Dublin Industrial Estate, Airways Industrial Estate and Malahide Road Industrial Park - all are within minutes of the entrance to the tunnel.
A price of €3.3 million was secured in January for a 1.33-hectare site on the Old Airport Road opposite Airways Industrial Estate. The site, around 2kms from the tunnel entrance, had been on the market for over three years. These transactions are evidence of pent-up demand for quality land and buildings with easy access to the DPT.
An area set to benefit significantly from the tunnel is Balbriggan. With the M1 extension from Dublin Airport to Courtlough complete, the port will be 20 minutes from the Balbriggan/M1 junction. Balbriggan also enjoys a good road network via the M1 to Belfast and the improvement in access to Dublin Port may encourage northern companies to develop smaller hub sites in Dublin. Land values in the area are around €450,000-€500,000 per acre and have potential for significant growth over the next few years.
Two major business parks will be developed in Balbriggan, including Fingal Bay Business Park, a joint development between Howard Holdings and Fingal County Council. Already, an 7,432sq m (80,000sq ft) hi-bay warehouse has been completed for Bridgestone Tyres as has a 323sq m (30,000sq ft) office building for the Passport Office. Treasury Holdings has commenced development on the M1 Business Park, a new 80-acre development at the M1/Balbriggan junction.
Balbriggan has the potential to become a prime industrial area over the coming years. There is an opportunity to capitalise on the market with the potential for a significant uplift in values in the short to medium term.
Fingal County Council is expected to adopt its new development plan this summer. Significant landbanks are likely to be rezoned from agricultural/amenity uses to industrial, particularly between the Ballymun and M1 junctions on the northern side of the M50. This increase in the supply of industrial land is not just a result of the region's increased capacity to service more land since the completion of the Northern Fringe sewer two years ago. It also points to the council's aspirations for significant development and growth during the life of the new plan and the DPT will have a fundamental part to play in achieving these goals.
Despite the higher than expected costs of providing the tunnel and the ongoing political debate on increasing its height for super-cube trucks, the opening of the DPT in 2006 will greatly boost demand amongst owner-occupiers and developers for industrial land and buildings across the northside of Dublin, making north Dublin the dominant industrial hub in Ireland.
Gavin Butler is associate director, Hamilton Osborne King
