According to Savills, given the lack of availability, signing for units prior to completion (pre-lets) in order to obtain modern stock remains prevalent, and accounted for 49% of take-up. This is evident again in the construction pipeline, with 70% of space due to be delivered this year either reserved or signed.

With two deals over 100,000 sq ft, the average deal size moved to 48,000 sq ft, the second highest in our series and trumped only by Q3 2022 where a higher than average number of deals over 50,000 sq ft signed. Building 2 Greenogue Logistics Park made up the largest letting of the quarter, and third largest on record, with over 286,000 sq ft signed by Wincanton, a distribution contractor of Ikea. The opening of this building as Ikea’s local distribution centre marks its expansion of operations in Ireland and would enable quicker fulfilment of orders for Irish customers. This deal also represents the sole standing stock deal in the top five transactions, the remaining being pre-let.

The remaining four of the top five deals were all pre-commitments, with one being a forward sale and the others pre-lets. The first was a pre-purchase of 119,000 sq ft at Unit 637 Northwest Logistics Park. This was followed by an 88,000 sq ft pre-let at Unit 1 Brownsbarn, a high profile new development in Citywest where the fifth largest deal also took place, Unit 2 measuring 64,000 sq ft. Lastly, 73,000 sq ft was also signed for in Unit F Mountpark, Baldonnell.

Jarlath Lynn, Director of Industrial and Logistics, commented:

“Despite uncertain macroeconomic factors, demand remains robust for industrial and logistics space in Dublin as global supply chains have recovered and sentiment has lifted given reductions in shipping costs. While these costs have decreased, occupiers continue to seek modern units with high energy efficiency ratings to keep running costs down and avoid having to renovate an older building. Higher energy efficiency also contributes to working towards climate goals on lowering carbon emissions.”

A high level of take-up and continued popularity for pre-commitment arrangements meant the vacancy rate came under downward pressure and moved from 1.6% in Q4 to 0.9% in Q1 according to provisional figures. Just 27 units were vacant, the lowest on record. This consists mostly of older units, with units built from the 2000s onwards accounting for just 12% of vacant sq ft.

Take-up has traditionally taken place mostly in south of Dublin given the popularity of occupiers to locate to the N7 corridor in the southwest. On average, this location alone accounted for 52% of space taken with Q1 being no different, 67% of space was located in the southwest area. However, in the pipeline, activity is to increase in the north of Dublin as 75% of space due to be delivered between 2023 and 2025 will be in north Dublin. This is set to influence take-up trends in the future.

Jarlath continued:

“The N7 corridor is an important industrial and logistics hub however, land for the correct use is in short supply, capping development in this location. On the other hand, large parks are under construction, or granted and at various planning stages in both the northeast and northwest of Dublin including Nexus Distribution Park, Horizon Logistics Park, and Dublin Airport Logistics Park. These parks will provide new stock for occupiers and pivot the higher proportion of take-up from southwest to north.”

Despite another record year of delivery expected in 2023 of 2.1m sq ft, supply dynamics are expected to remain tight due to 70% of space having already been reserved or signed. Rental inflation persists due to these tight supply dynamics and limited availability of modern units across all sizes. Given the preference for modern units, lack of availability, and increased construction costs for continually enhanced specification, this has supported the increase in prime rents from €12.00 to €12.50. Secondary rents have also experienced an increase from €9.00 to €9.25.