Supermarket chains and logistics companies who centralise their warehouse operations may revert to smaller regional distribution hubs due to worsening traffic.
Paul McNeive, industrial director of HOK, told a recent seminar that the "just-in-time" revolution in the UK - where distribution companies centralised their operations in hi-bay buildings on the M6 spine - has been reversed.
"As a result," he said, "there are now definite development opportunities in Ireland for industrial developers and builders to provide provincial distribution depots." Mr McNeive believes obsolescence will be a major factor for the next two years in the industrial market.
"Over half of Dublin's industrial buildings were built in the 1980s with asbestos roofs and low eaves heights. These occupiers will need to move into newer premises over the next couple of years, causing demand for new industrial space to increase."
Due to power supply problems and a slow down in the IT sector, McNeive says there is likely to be a lull in data centre development, but this market may bounce back later in the year.
Ballycoolin, he says, is now the second largest hub of industrial development space in Dublin, while Naas and Newbridge are increasing in importance. The Naas Road is suffering from "a severe under-supply of zoned serviced land" with traditional Naas Road occupiers being forced elsewhere.
There is 1.6 million sq m of industrial space due for completion in the greater Dublin area in 2001 - a marked increase from 1.25 million sq m in 2000 and 1 million sq m in 1999.
Prime new space up to 500 sq m will get £100 (#126.97) per sq m and the price will be £1,615 (#2,050) per sq m. Rent for larger space will be £86 (#109.20) per sq m and the price £1,000 (#1,269) per sq m. Second values will be slightly less.
HOK's office market specialist Roland O'Connell warned that, as employees become more selective about job location, developers must pay more attention to transport access and support facilities (creches, gyms, parking and so on) when looking for occupiers.
He said unfashionable central areas - Smithfield, the Docklands, the Coombe and Liberties - and areas along the Dublin ring road are becoming popular for office development.
In 1990, 68 per cent of new buildings completed were in Dublin 2 and 4, while last year 68 per cent were in ring-road locations.
Last year's record take-up levels of 190,000 sq m will drop to 120,000 sq m this year, while completions will reach a record 300,000 sq m.
"Against this background, suburban rents are likely to stabilise. They rose only 6 per cent during 2000 and it is likely that with building costs increasing at a faster rate, site values will fall."
