A new report from Savills has revealed that take-up of industrial space in Dublin totalled over 66,000 sq.m. in Q1 2016. Despite this being lower than the Q1 2015 total, it is higher than the average Q1 take-up of 60,000 sq.m. over the last five years.

Gavin Butler, Director of Industrial at Savills Ireland commented;
“This lower level of take-up compared to Q1 2015 may reflect the absence of the CGT incentive which drove the market in 2014 and early 2015, however, it’s more likely a reflection of the growing scarcity of modern stock in prime locations, which is making it quite challenging to meet the demand for space that is out there.”

However, demand for quality industrial space remains strong, and this is likely to make development more viable, according to Mr Butler;

“With the availability of good quality units becoming scarce, developers are now once again beginning to build speculative space. One such example is Rohan Holdings which plans to begin the development of units ranging in size from 1,000 to 6,000 sq.m. at North City Business Park, Dublin Airport Logistics Park and on lands near Citywest just off the N7 later this year. However, it will be 2017 before any of this space is delivered, meaning, in the absence of new supply, capital and rental values are set to rise further.”

From an economic standpoint, the report notes that despite a slowdown in global manufacturing and increased uncertainly in the UK arising from a potential Brexit, indictors at home continue to suggest that firms here are weathering the tougher external climate.

John McCartney, Economist and Director of Research at Savills Ireland stated;

“We are simply producing and buying more stuff. Between the factory and the consumer all of this needs to be transported and warehoused, and that is creating a need for logistics space. With the economy set to grow further over the next two years, this demand will only increase”

Elsewhere in the report, Savills notes that outright sales of industrial property accounted for over 50% of transactions in Q1. This is a low proportion by historical standards and probably reflects the scarcity of debt finance that is available to buyers. In keeping with this, most of the sales that have taken place have been cash funded.