Highest volume of industrial take-up in 5 years reported in Dublin

Highest volume of industrial take-up in 5 years reported in Dublin

 

Activity in the Dublin industrial market continued unabated in Q3 2012, as another strong quarter of transactional activity led to the highest level of industrial take-up since 2008 being signed in the first nine months of the year. Although down on the particularly strong level of transactions signed in Q2 2012, over 56,600 square metres of industrial accommodation was let or sold in Dublin in Q3 2012.

This brought the total level of industrial accommodation signed in the first nine months of 2012 to just under 157,000 square metres – an improvement of 46% on the same period in 2011.

Despite the continuing threat of a reduction in export demand from our main trading partners in Europe, positive economic trends emerged over Q3 2012 that served to slightly alleviate the immediate worries facing the Irish industrial sector. According to a leading purchasing manager’s index, an improvement in orders was witnessed in September 2012, while the latest retail sales figures grew for the second consecutive month in August 2012.

Although conditions remain challenging, these indicators are boosting some sectors of the industrial market such as storage and distribution. Indeed, these occupiers account for the greatest proportion of active requirements in the Dublin industrial market at present.

Prime rents for industrial property in Dublin remained steady at €60 per square metre in Q3 2012. Rents for secondary industrial facilities also remained steady during Q3, at €37
per square metre. There has been a resurgence of sales activity in the industrial sector over recent months.

According to the latest Investment Property Databank (IPD) index, total returns in the industrial sector improved for the third consecutive quarter in Q2 2012, while CBRE’s index of prime capital values showed that capital values remained stable over Q3 2012 as did prime yields which remained stable at 9.5%.

36% of total industrial transactions in Q3 2012 comprised sales to owner occupiers, which is perhaps not surprising considering the extent to which values have declined from peak.

Over 36,300 square metres of industrial accommodation was let in the capital during Q3 2012, in 22 individual transactions. This compares to 31 lettings signed in Q2 2012. 47% of the accommodation let in Q3 2012 occurred along the Dublin South West (N7) corridor. A further 19% of lettings signed during the quarter were along the Dublin North West (N3) corridor while the North East (N1/M1) corridor accounted for 10% of Q3 lettings. Indeed, the Dublin South West (N7) corridor proved the most popular location for both lettings and sales over the quarter with 57% of all transactions signed in Q3 2012 occurring in schemes along the corridor.

Almost half of all industrial transactions signed in the last three month period extended to over 9,290 square metres in size. Most of the demand in this sector is being generated by distribution companies and also occupiers looking to expand and relocate to take advantage of current rental levels.

Although less new requirements came to the market in Q3 2012 than was absorbed in take-up, our register of active requirements shows that there is currently demand for over 85,000 square metres of industrial accommodation in Dublin. Close to two thirds of these requirements (61%) are for units that range between 1,859 and 9,290 square metres in size, while a further 11% of demand is for larger units.

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