A pronounced pick-up in economic activity has driven the take-up of industrial space to a record high in Q3 2014, according to a new report from property consultants Savills Ireland.  The report notes Ireland’s GDP has grown more than twice as quickly as that of Luxembourg - the next best performing economy in the Eurozone.  As a result, the demand for logistics and warehousing space has increased rapidly.  However, Savills argues that the standard GDP growth measure actually understates the demand for industrial sheds.  As Savills’ Director of Research, Dr. John McCartney explains;

“Because goods need to be warehoused both on their way into and out of the country, the national accounting convention of netting imports against exports understates the demand for logistics space.  A better measure is the additive total of goods exports and imports which has risen by 8.5% in the last year.  This has turbo-charged the demand for sheds, leading to a record take up of approximately 90,000 sq m in Q3 2014.”

Looking ahead, Savills expects the strong industrial take-up to continue through the remainder of this year due to the imminent expiry of Capital Gains Tax (CGT) incentives on 31st December.

Gavin Butler, Director of Industrial at Savills Ireland commented:

“Market activity continues to be dominated by sales with outright purchases accounting for 70% of transactions in Q3 – a direct result of the CGT waiver deadline which has continued to fuel demand in Q4.”

Looking further ahead, Ireland’s continued strong trading performance is expected to underpin demand for industrial space into 2015, with Savills projecting capital value and rental growth of greater than 10% next year.