Take up of industrial property rose to a new high in the first quarter of 2015 as increased goods traffic through Dublin Port drove the demand for warehousing space.
Take up of industrial property rose to a new high in the first quarter of 2015 as increased goods traffic through Dublin Port drove the demand for warehousing space. According to a new report from Savills, cargo volumes at Dublin Port rose by 5.3% in Q1 – its best Q1 result in ten years.
This reflects a sharp increase in both the imports and exports of goods, a trend which is also benefiting the industrial property market.
According to Dr. John McCartney, Economist and Director of Research at Savills Ireland, imports of goods were up 16.9% year-on-year in February, reflecting the impact of a weaker Euro. At the same time, a recovery in the consumer economy has also led to an 11.9% increase in imports.
Commenting on these trends, McCartney said: “While imports and exports work against one another in the national accounts calculations, both types of trade lead to demand for transport and logistics services, and this ultimately benefits the industrial property market”.
Gavin Butler, Industrial Director at Savills Ireland says the knock-on effect of an increase in exports and imports has been substantial demand and take-up of industrial space:
“Total take up of industrial space in Q1 2015 was over 107,000 sq m – a 72,000 sq m increase on the same quarter last year, and the highest Q1 figure recorded since 2008. With capital values still well below reinstatement cost, there continues to be strong demand for industrial property from owner occupiers. As a result, outright sales accounted for 71% of all transactions and eight of the ten biggest deals in Q1.”
Looking ahead, Savills reports that growth in both exports and imports will continue to drive the demand for warehousing space. As a result the industrial property market should continue to tighten with further growth in capital and rental values. Gavin Butler commented: “With capital values recovering from a very low base and interest rates remaining flat, there will continue to be strong sales activity in 2015. Moreover, with no new supply of industrial space expected before 2017, growth in capital and rental values will increase further in 2015 & 2016.”