Click here for report

Click here to view video commentary

Offices

• Take-up in the Dublin office market during the first nine months of 2017 reached 183,630m² - an impressive result considering annual average take-up in Dublin in recent years has generally been in the order of 200,000m² per annum. The fact that there was an additional 100,000 square metres of office stock reserved at the end of the third quarter bodes well for take-up volumes in Q4 and indeed for the year as a whole.

• Several large mandates that have been in the market for some time have now reportedly shortlisted buildings, which will boost take-up over the next few quarters. Brexit-related activity continues to add an additional layer of demand with several more companies having recently announced their intention to relocate or expand their existing Irish facilities as a direct result of Brexit.

• With pre-lettings accounting for approximately one quarter of take-up in the Dublin office market at present, it is likely that all of the more than 270,000m² of new office stock delivered in the capital during 2017 will have been leased by year-end, which demonstrates that new supply is being delivered in a very measured fashion.

• Prime office rents in Dublin have now risen to €681 per square metre (€63.50 per sq. ft.) and are expected to reach €700 per square metre by year-end. Meanwhile, prime rents in the suburbs of the capital have also increased recently. Prime rents in the south suburbs are now in the order of €306.66 per m² or €28.50 per sq. ft. while prime rents in the north and west suburbs are now €200 per m² and €188.30 per m² respectively. A busy few weeks are now ahead with several large office leasing transactions due to sign before Christmas including a number of notable transactions in the south suburbs of the city as well as in the south Docklands.

Industrial & Logistics

• Take-up in the Dublin industrial and logistics market in the first three quarters of 2017, at approximately 170,000m², was down 20% year-on-year. This is somewhat disappointing considering the volume of demand for modern industrial and logistics accommodation in and around the capital.

• Over the last couple of years, the industrial market has been characterised by a significant shortage of modern accommodation in locations preferred by end users, leading many potential industrial occupiers to opt for ‘design and build’ solutions. However, now that prime rental values have reached a level that justifies new development, we expect to see this situation alleviated. It is therefore not surprising that there has been an increase in demand for well-located sites capable of accommodating modern industrial and logistics facilities over recent months, particularly against a backdrop of increased appetite as a result of Brexit.

• Industrial and logistics developers are encouraged by the volume of active requirements in the market at present with more than 117,000m² of active demand prevailing at the end of Q3 and at least one live requirement for more than 18,587m² (200,000 sq. ft.).

• Having increased by 6% in the first half of 2017, prime industrial rents in the capital remain stable at €99.50 per square metre as we approach year end while rents for secondary and provincial properties have increased to approximately €61.87 per square metre and €53.80 per square metre respectively.

Retail

• Retailers are now fully immersed in their Christmas trading programmes and as a result CBRE expect to see less focus on securing premises and concluding property transactions in this sector until after the New Year.

• The primary focus for retailers over the next two months is capitalising on the underlying strength of consumer appetite in the Irish market, maximising footfall and growing retail sales activity, both in-store and online. With Sterling still weak, it remains to be seen to what extent these efforts will be challenged by leakage to Northern Ireland and indeed to UK websites as the now traditional Black Friday and Cyber Monday sales approach.

• With uncertainty around Brexit continuing to hamper the expansion and relocation plans of many UK retailers, much of the activity in the Irish retail market is currently being driven by indigenous retailers with a scarcity of new entrants very much in evidence.The majority of the retail leasing deals being negotiated at present are emanating from a distinct cohort of retailers with those involved in the food and beverage sector being most active.

• CBRE expect to see strong Christmas trading in Dublin and other dominant retail locations over the next two-month period with Dublin city centre trading patterns likely to be particularly boosted by the welcome completion of LUAS construction work.The opening of the long-awaited Victoria’s Secret store and the re-opening of Bewley’s on Grafton Street later this month will also boost footfall on the capital’s main thoroughfare in the run-up to the festive season. Prime retail rents remain stable at present.

Investment

• The recent unexpected hike in stamp duty for commercial property in Budget 2018 from 2% to 6% will have a one-off hit of approximately 3.8% to property valuations and pension fund values in Q4. This will see the 2017 annualised return from Irish commercial real estate easing back to single digits albeit the rate of return remains attractive compared to returns being achieved in other European locations.
• Demand still remains strong regardless with core and core plus investors chasing a limited supply of product. Going forward, CBRE believe we may see some assets being sold through Special Purpose Vehicles as was the case when the rate of stamp duty was at or higher than 6% previously.
• Approximately €1.3 billion of investment transactions (exceeding €1 million) completed in the Irish market in the first nine months of 2017. The likely outturn for 2017 is expected to be in the order of €2.25 billion. However, estimating annual investment spend is difficult with several large transactions ongoing, some of which will complete before year-end and others which now are likely to fall into 2018.
• Prime office yields hardened in the last month on the back of new transactional evidence with prime yields in the sector now trending at 4.25% and likely to strengthen further over the coming months. Prime yields for multifamily investments are also trending at 4.25% at present. Meanwhile, prime high street yields are steady at 3.15% with prime industrial at 5.5%.

Development

• Based on transactions that are expected to complete before the end of the year, CBRE expect the overall volume of spend in the development land sector to be broadly similar to last year’s outturn of approximately €800 million. With a few notable exceptions, transactional activity continues to be dominated by relatively small land parcels. The property consultants say this is obviously disappointing considering the pent-up demand for development sites in the market at present, particularly in the residential sector in core cities including Dublin, Cork, Limerick and Galway.
• One of the more encouraging announcements of late was one from the Minister for Housing that intimated that Government are prepared to consider reviewing urban building heights in Dublin, relaxing car-parking ratios in schemes within 1km of a Dart/LUAS line or urban rail and facilitating co-living options in urban locations. While this many of the other policy announcements made over recent weeks and months have been welcome and offer solutions that have the potential to unlock much-needed supply, we now need clarity to enable these plans to be put into action to facilitate timely delivery.

Hotels

• Transaction volumes in the Irish hotel market in the first nine months of 2017 were somewhat disappointing with only 23 hotel sales, a capital volume of €87 million between them, having completed in the year to the end of September. The final outturn for the year will however be considerably stronger with several significant transactions including Carton House Hotel in Maynooth, Co. Kildare, and The Knightsbrook Hotel in Trim, Co. Meath now nearing completion and Galway’s Radisson Blu Hotel having recently changed hands for a reported €50 million. Meanwhile, negotiations are nearly concluded on the investment sale of The Gibson Hotel in Dublin Docklands - the largest Dublin hotel to trade in 2017.
• The hotel sector has welcomed the Irish Government’s decision to retain the 9% VAT rate in last month’s Budget although the four percentage points increase in the rate of Stamp Duty on non-residential property sales took the market by surprise and is certain to have influence on future hotel purchases. Meanwhile, the relaxation of the Capital Gains Tax (CGT) relief hold period from 7 years to 4 years for assets purchased up to the end of 2014 may lead to an increase in hotel property re-trades from next year onwards.

Cork

• Activity in the Cork market has been relatively strong over the Autumn with a good volume of investment stock released for sale over recent months. Investor appetite for opportunities in Cork has increased noticeably, buoyed by the strength of underlying occupational activity and comparatively more attractive rents and yields than in Dublin.

• Considering the weight of capital seeing investment opportunities in the Cork market, prime yields have hardened a little of late with prime high street retail and prime office yields now at 5.75% and 6.0% respectively and yields in all sectors potentially trending stronger over the coming months.

The property comprises a regular shaped site of approximately 0.21 hectares (0.52 acres) with frontage of 27 metres onto Cabinteely Village.

The property had planning permission for a mixed use scheme comprising of 2 retail units and 49 bedroom nursing home but this planning permission has lapsed - D10A 0621.

The site is currently divided into 3 separate properties and there are short term sitting tenants in place that have been in place for over 5 years and have gained tenancy rights.

Number 4 is occupied by ‘Cabinteely Motors’ and comprises a 232 sq.m. garage premises. Number 5 & 6 comprises a large car showroom yard (0.4 acres) which is rented out to Alan Lewis Motors. Number 7 is a 3 bedroom bungalow of approximately 102 sq.m. in size.

There is a total passing rent of approximately €66,000 p.a. and there could be potential to develop the site, subject to planning permission and vacant possession.

The property is currently zoned objective – which is ‘to protect and/or improve residential amenity’.

CBRE are quoting a sales price in the region of €1,100,000 for this property.

The sale of Jacobs Inn hostel presents an exceptional opportunity to acquire a modern, purpose built hostel with 428 bed spaces and excellent facilities and is presented in truly "turn-key" condition.

Jacobs Inn is located on Talbot Place, just off Talbot Street in the heart of Dublin City Centre. This area of Dublin has become a mecca for budget accommodation and holiday makers as it is the perfect launch pad for any visit to Dublin. It enjoys excellent infrastructure connectivity and is convenient to a range of public transport facilities including Connolly Mainline Railway Station, LUAS, DART and Busaras, Dublin’s main bus station. The hostel is also convenient to Dublin Airport and the ferry terminals at Dublin Port.

Within easy walking distance are a host of tourist attractions including Trinity College (Book of Kells), the GPO, Garden of Remembrance, Dublin Castle, Christchurch Cathedral and Guinness Storehouse. The property is also convenient to Temple Bar with its myriad of bars, restaurants and nightclubs and to the premier retail precinct of Henry Street / Mary Street including Jervis Shopping Centre and the Ilac Shopping Centre. The hostel is also within walking distance of the Abbey Theatre, Convention Centre Dublin (CCD), the 3 Arena, Bord Gais Energy Theatre, Aviva Stadium and Croke Park.

Jacobs Inn was first opened in 1997 and in the intervening period has become a well-established and profitable hostel. Since its acquisition by the present owners in 2014, an extensive programme of refurbishment has taken place to enhance and improve the existing facilities. The hostel now boasts 65 modern bedrooms offering a range of accommodation facilities including dormitories and private rooms to accommodate 428 bed spaces. Other facilities within the hostel include an open plan reception area, funky chill out area, games room, guest self-catering kitchen, dining room, laundry room and an extensive luggage storage area. On the third floor there is an outside terrace with excellent views of Dublin.

Offers in excess of €13.5 million are being sought for the property.

The Top Companies list leverages exclusive LinkedIn data focused on what job seekers are doing. In turn, the list helps professionals discover and follow the companies where they may want to land their next job. The employers included on the list are selected based on a combination of exclusive LinkedIn data including reach, engagement, job interest, retention and an editorial lens. The methodology also includes the actions of job seekers and professionals with editorial oversight.

The LinkedIn Top Companies list includes companies from around the globe, including the U.S., U.K., France, India, Australia, Brazil and Germany. The full list of companies named to the list appears here.

There has been a notable increase in appetite in Build to Rent from international institutions of late. Whilst London has traditionally been the focus of investors’ attention, the UK’s regional cities are becoming increasingly prominent as American funds begin to explore the market and demonstrate their willingness to move higher up the risk curve in regional cities that offer a strong investment case. Therefore, it is logical that if investors are willing to look at opportunities in regional UK, they are very likely to consider opportunities in Ireland where supply shortages are particular acute. Indeed, CBRE say they have seen increasing evidence of this trend over recent months.

The second Ireland Logistics & Supply Chain Confidence Index was undertaken by specialist research agency Analytiqa who undertake a series of similar surveys across a number of jurisdictions. More than 50 senior decision makers from across the logistics and shipping sectors in Ireland participated in the survey. Respondents included CEO’s, Managing Directors and senior management of some of the largest logistics providers, firms and buyers in the State.

Click here to read full report

Some of the key findings of the research are as follows:

• Confidence amongst both logistics operators and shippers in the Irish market is down year-on-year as a result of economic uncertainty with the index coming in at 60.4 compared to 72.7 in 2016. In 2016, logistics operators (81.1) were considerably more confident than shippers (64.0). This year there is little variance between both, with confidence amongst logistics operators at 59.7 and shippers showing 61.2.

• 50% of respondents to the Irish survey this year say they are more confident about business conditions in the logistics and supply chain sector than they were 12 months previous, down 16% on last year. The number of respondents who said that conditions were ‘somewhat more difficult’ compared to 12 months ago was up 10% year-on-year.

• When asked how confident they are about business conditions over the next 12 months, 40% of respondents say that conditions will be ‘somewhat more difficult’ which is perhaps not surprising. A further 6% of respondents say that conditions are likely to be ‘much more difficult’ next year. 21% of respondents expect business conditions to be the same while 31% expect conditions to be ‘somewhat more favourable’ over the next 12 months. Only 2% of respondents are expecting business conditions to be ‘much more favourable’ over the next 12 months.

• The responses differ somewhat between the logistics sector and shippers, with logistics operators in general being more pessimistic this year. 44% of logistics operators say that conditions over the next 12 months are likely to be ‘somewhat more difficult’ compared to the same period last year compared to 36% of shippers. Meanwhile, 36% of shippers say that conditions are likely to be ‘much more favourable’ over the next 12 months compared to 26% of logistics operators, which is interesting.

• When asked about anticipated changes in turnover over the next 12 months, it was encouraging to note that 80% of respondents said they expected turnover in their organisation to increase over the next year although this reflected an 8% deterioration year-on-year. 44% of respondents expect a relatively modest increase of between 2% and 5% in turnover over the next 12 month period, with 19% anticipating an increase of between 5% and 8% in turnover in the period. More than 7% of respondents forecast an even higher increase in year-on-year turnover of between 8% and 10%, while almost 10% of respondents to the survey expect turnover in their business to increase by more than 10% over the next 12 months.

• When asked about anticipated changes in profitability over the next 12 months, it was encouraging that respondents were also generally positive, with almost 58% of respondents expecting increased profitability over the next 12 months. More than a third of respondents expected no change in profitability this year and while almost 8% expected deterioration in profitability this year, all of these respondents expect profitability to decline by between 2% and 5% with no respondents expecting a higher deterioration in profitability.
• When asked about the likelihood of their company making significant logistics and supply chain related capital expenditure over the next 12 months, responses varied. 33% of respondents said it was likely that they would make significant capital expenditure in these areas over the next 12 months while almost 22% said they were very likely to do so which is encouraging. However, respondents were in general less positive about making significant capital expenditure than they were 12 months ago.

• More than 55% of respondents in the logistics sector expect to increase headcount in their organisations in the next 12 months compared to only 36% of shippers.

• Almost 20% of respondents said they were more positively disposed towards the Eircode postcode system than they were 12 months ago.

• More than 87% of respondents say that Ireland is either ‘average’ or ‘better than average’ in terms of investment attractiveness compared to other EU countries, with shippers more positive than logistics companies in this area. In total, 92% of shippers said that Ireland was either ‘average’ or ‘better than average’ in terms of investment attractiveness.

• 56% of respondents expect an increase in demand for logistics property in 2017, with logistics operators considerably more bullish in this respect, mirroring trends in last year’s survey. 77% of respondents from the logistics industry expect to see an increase in demand for logistics properties in 2017 compared to only 38% of shippers.

• Over 81% of respondents plan to introduce some form of new innovation to their business over the next 12 months compared to 85% 12 months ago. Of those that intend introducing new innovation in 2017, 24% of respondents said that they intend investing in big data and analytics in 2017. A further 19% respectively said they will be investing in the ‘Internet of Things’ and automation /robotics in 2017 while almost 23% said they would be investing in cloud services this year. 3% of respondents said they will be looking to implement 3D printing this year compared to 1% of respondents last year.

• Respondents were asked to identify the key drivers influencing contract wins from customers or contract awards to service providers in the last 12 months; most respondents (29%) cited price competitiveness as being of significant importance, mirroring last year’s results. This was followed by value added services (25%). 21% said that the scale of networks played a part and 16.5% said that personal relationships were a key influence (compared to 13% 12 months ago).

• When asked what their key business priorities for the next 12 months are, the two most important issues identified by logistics operators was maintaining their existing customer base and winning new customers. In contrast, the biggest focus for 2017 for shippers was cited as cost control and optimising operational efficiencies and speed.

• Overall, 18% of respondents to the survey respectively said that economic conditions and Brexit uncertainty were the biggest challenges facing their business in 2017. Other concerns that ranked highly in this year’s survey included customer price pressures & reducing costs as well employee wage pressures.

• When asked what challenges in particular they were fearful of as a result of Brexit, the issue that resonated most with respondents was a concern about a recession or a downturn in economic performance. This was followed by an increase in financial costs and the introduction of trade tariffs and foreign currency trading. Other items which were identified included greater bureaucracy and administrative burdens, challenges in maintaining labour and an impact on the supply of talent.

• 78% of respondents to the 2017 survey say that they have undertaken activity in their companies in direct response to the Brexit issue, with 37% of those saying they have completed background research on the issue, a further 33% saying they have had informal discussions with customers, service providers and/or trade organisations while 30% say they have set up internal discussion/working groups.

Speaking at the event, Fionn Uibh Eachach from KPMG said: “This year’s survey is again another detailed insight into the mind-set of the key players of the logistics and shipping industries which has shown a decline in overall confidence in the sector. It is not surprising to see this decline given that potential increases in customs duties and administrative costs could affect international trade into and out of Ireland. Hence it is particularly important for companies in the logistics and shipping industry to be undertaking planning now for a post-Brexit world.”

The guest speaker at the launch event was Pamela Quinn, MD of Kuehne & Nagle and 2017 Image Magazine Businesswoman of the Year who gave a very interesting speech on the future direction of the logistics and supply chain network.

- ends-