Scarcity Of Modern Industrial Premises Continuing To Impact Take-Up Volumes
Dublin, 13th April 2017 – Commercial property consultants CBRE Ireland today released statistics on the volume of industrial leasing and sales activity completed in Dublin in the first three months of the year. According to CBRE, more than 50,000m2 of industrial transactions were signed in the Dublin market in the first three months of 2017. This is down 28% on the volume of activity achieved in the first quarter of 2016, which is reflective of a severe scarcity of modern accommodation in core locations. Indeed, there were 38 individual industrial transactions signed in Dublin in Q1 2017 compared to 47 transactions signed in the same period last year, which is largely attributable to shortages of modern accommodation in the capital.
Transactional activity in the industrial sector during Q1 2017 was primarily focused on the Dublin South West (N7) corridor, which accounted for 23% of all sales and lettings completed in Dublin in the three-month period. A further 19% of the industrial accommodation that either let or sold in Dublin during Q1 was located along the Dublin North East (N1/M1) corridor while 18% of industrial take-up in Dublin in Q1 occurred along the North (N2) corridor and the Dublin South West (N82) corridor respectively.
67% of the total volume of industrial take-up recorded in Dublin in Q1 2017 comprised lettings with 21 of the 38 transactions signed in the period comprising lettings. Prime rents remain stable at approximately €94 per square metre (€8.75 per sq. ft.) at the end of the first quarter of the year.
71% of Q1 take-up in the Dublin industrial market extended to more than 1,858m2 (20,000 sq. ft.) in size. No transactions that extended to more than 9,290m2 (100,000 sq. ft.) in size were completed in the capital in the quarter. 47% of industrial take-up in the capital in Q1 comprised transactions of between 1,858m2 and 4,645m2 (20,000 – 50,000 sq. ft.) in size. Interestingly, 18 of the 38 transactions signed in Dublin in the first three months of the year were smaller than 465m2 in size although combined, they accounted for only 8% of total take-up in the capital in the period.
The overall volume of demand in this sector fell quarter-on-quarter. There was more than 68,000m2 of demand for industrial accommodation prevailing at the end of Q1 2017 of which 66% was focussed on the Dublin South West (N7) corridor in particular. A further 16% of demand at the end of Q1 was focussed on the Dublin North (N2 corridor) specifically.
Appetite for good industrial investment opportunities remains strong, buoyed to some extent by rental growth expectations in this sector. However, supply remains constrained, particularly for larger lot sizes. Of the €492 million invested in Irish income-producing assets with a value of more than €1 million in Ireland in Q1 2017, 8.5% comprised industrial investments specifically. According to CBRE’s research, prime industrial yields in the capital are stable at approximately 5.50% at the end of Q1 2017 and are expected to remain stable for the foreseeable future.
Prime rental values in the industrial sector are now close to levels that justify new development and on that basis, we expect to see an increase in speculative development activity in this sector of the market later in 2017, particularly now that it appears that Brexit may result in heightened demand for industrial and logistics accommodation in the capital in due course.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), 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 2016 revenue). The company has more than 75,000 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.
In Ireland, with offices in Dublin and Belfast, CBRE is the country’s largest commercial real estate services company, now employing over 165 employees and offering a full range of property services including property sales and acquisitions, leasing and management, investment, corporate services, debt advisory, project management, consultancy, business rates and compulsory purchase, valuations and research. Please visit our website at www.cbre.ie or www.cbre.ie/ni.