Bumper Third Quarter For Dublin Industrial & Logistics Sector Following Slow Start To The Year
October 9th, 2018 – Property consultants CBRE Ireland have today released figures for the volume of industrial and logistics lettings signed in Dublin during the first nine months of 2018, which shows that after a slow start to the year, bumper take-up occurred in this sector during Q3.
64% of the total volume of industrial take-up recorded in Dublin in Q3 2018 comprised lettings (26 transactions) with the remaining 13 of the 39 transactions signed in the period comprising sales. For the nine months of 2018, lettings accounted for 64% of transactional activity in this sector.
Prime industrial rents in Dublin rose quarter-on-quarter and stand at €106 per square metre (€9.85 per sq. ft.) at the end of Q3 2018. Prime rents are expected to rise further over the coming months.
Transactional activity in the industrial sector during Q3 2018 was primarily focused on the Dublin South West (N7) corridor, which accounted for 53% of all sales and lettings completed in the Dublin industrial & logistics sector in Q3 and 45% of all activity in the first nine months of 2018. Meanwhile, 22% of industrial take-up in the third quarter occurred along the Dublin North West (N3) corridor. A further 16% of the industrial accommodation that either let or sold in Dublin during Q3 was located along the Dublin North East (M1) corridor.
More than 100,000m2 of take-up was recorded in the Dublin industrial & logistics market during the third quarter of 2018, bringing total take-up in this sector in the first nine months of 2018 to 210,245m2. This is 24% higher than the volume of activity achieved in the first nine months of 2017 demonstrating the impact that new supply is now starting to have on the industrial & logistics sector. There were 39 individual industrial transactions signed in Dublin in Q3 2018 including some pre-lettings.
The largest majority (52%) of transactional activity in the last three-month period comprised transactions that extended to more than 9,290m2 (100,000 sq. ft.) in size, while a further 26% of industrial take-up in the capital in Q3 comprised transactions that extended to between 1,858m2 and 4,645m2 (20,000 - 50,000 sq. ft.). Meanwhile, 7% of Q3 take-up comprised transactions that extended to between 929m2 and 1,858m2 (10,000 – 20,000 sq. ft.).
The overall volume of demand in the industrial and logistics sector fell quarter-on-quarter as several mandates were fulfilled during the last three-month period. In total, there was demand for 39,875m2 of industrial accommodation prevailing at the end of Q3 2018. A large proportion of active requirements in the industrial & logistics sector are as a result of developments in e-commerce as service providers look to increase efficiencies in their delivery model to service the needs of online consumers - a trend that is exacerbated by Brexit concerns. In addition to demand from food companies, there is particularly strong appetite for modern accommodation from logistics providers, couriers and parcel delivery companies at present. In addition to a small number of speculative schemes that are presently under construction in the capital, there is good momentum in ‘Build-to-Suit’ activity in the Dublin market. Appetite for data centre sites is particularly strong, which is encouraging, although sourcing good sites continues to prove challenging with very little industrial zoned land being offered for sale.
Appetite for good industrial investment opportunities remains strong, buoyed to some extent by further rental growth expectations in this sector with a further uplift in prime rents in the capital anticipated before year-end. However, supply remains constrained, particularly for larger lot sizes. Although there has been an improvement quarter-on-quarter, of the more than €2.6 billion invested in Irish income-producing assets with a value of more than €1 million in Ireland during the first nine months of 2018, only 2% comprised industrial investments specifically.
According to CBRE’s research, prime industrial yields in the capital sharpened by 25 basis points in recent months, standing at 5.25% at the end of Q3 2018 and likely to trend stronger over the coming quarters.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2017 revenue). The company has more than 80,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
CBRE U.C., (CBRE Ireland) registered in Ireland, no. 316570. PSRA Licence No. 001528 is the country’s largest commercial real estate services company with offices in Dublin and Cork. Currently employing over 135 employees, we work with occupiers, investors and developers of office, industrial and logistic, retail, hotel and healthcare property, providing strategic advice and execution for property sales and leasing; tenant representation, corporate services; property and project management; appraisal and valuation; development services; investment management and debt advisory; business rates and compulsory purchase and research and consulting. Please visit our website at www.cbre.ie