“Signs of revival are evident in the industrial property market with the amount of floor space taken-up in the first quarter of this year equivalent to 70% of the total for 2009. Three large deals accounted for 63% of this total space taken-up.“ says Joan Henry, Head of Research at Savills who have just published the latest ‘Dublin Industrial Market in Minutes Q1 2010’ report.

A total of 42 deals were recorded in the market in Q1 2010, up significantly from a total of just nine deals over the same period in 2009. “All transactions in Q1 were lettings as there are few, if any, cash buyers in the market. A new trend is also emerging which is the reduction in the length of contracts that logistics providers are securing. Previously contracts were for five year periods but now many are negotiated for 12 month periods and logistics providers are seeking similar flexible terms on lease lengths” says Gavin Butler, Director of the Industrial Division at Savills.

Take-up reached over 78,000 sq.m. in Q1 2010, compared to just over 17,800 sq.m. in the same period in 2009. The amount of floor space taken up in Q1 was over 70% of the total amount taken up in the whole of 2009. “However this level of take-up cannot yet be seen as a sign of significant increase in demand as three large deals accounted for 63% of the space taken up with 39 deals acounting for the remaining 27% of the total space taken-up in Q1” says Joan Henry. The Northeast and Southwest regions of the greater Dublin area recorded the largest take-up levels in Q1 of 33,000 sq.m. and 28,000 sq.m. respectively followed by the northwest with 16,000 sq.m. taken-up.

The amount of vacant space across Dublin at the end of Q1 2010 was at approx. 1,200,000.sq.m. This compares to vacant stock of just over 1,053,000 sq.m. at the end of Q4 2009. “The increase in the amount of vacant stock can be attributed to a number of factors – some companies are exercising break options, others are not renewing leases when they expire and some are consolidating the number of outlets from which they operate in an attempt to reduce their cost base” says Gavin Butler. The northwest region recorded the largest increase in vacancy in Q1 with a 21% rise in the amount of vacant space available. A number of IDA units in Santry came to the maket in Q1 contributing to the amount of vacant space in the northeast increasing by 36,400 sq.m.

Rents across all regions have begun to stabilise at between €55-85 psm., depending on size, location and quality of premises. “The value of industrial property is estimated to have fallen to between €1,075-€1,230 psm but the lack of transactional evidence makes it very difficult to be more accurate than this. The cost of constructing an industrial unit is currently estimated to be higher than the value of existing second hand stock which, coupled with weak demand, has resulted in no new industrial completions taking place in Q1 2010” conludes Joan Henry.

Lease terms have become more flexible for tenants with more regular break options in leases and rent redcutions being granted as landlords strive to retain tenants.