Scarcity Of Modern Industrial Stock In Dublin Starting To Impact On Take-Up

Dublin, 14th April 2016 Commercial property consultants CBRE Ireland today released their latest Market View report looking at trends in the Dublin industrial market in the first quarter of 2016. According to the property consultants, a healthy level of take-up of 64,747m2 was recorded in the Dublin industrial sector during the first three months of 2016 with 47 individual industrial transactions signed in Dublin in the quarter. 46% of the transactions signed in this sector in Q1 2016 comprised sales with the remainder comprising lettings. The supply of modern industrial and logistics accommodation in prime locations has fallen dramatically in recent months, which in turn is impacting on occupier activity with take-up in Q1 2016 down 25% on the same quarter last year.

According to Jarlath Lynn, Director in the Industrial department at CBRE, transactional activity in the industrial sector during Q1 2016 was primarily focused on the Dublin South West (N7) corridor, which accounted for 42% of all sales and lettings completed in Dublin in the three month period. A further 16% of the industrial accommodation that either let or sold in Dublin during the first quarter was located along the Dublin North (N2) corridor while 15% of Q1 2016 take-up occurred along the Dublin North West(N3) corridor.

The majority (43%) of industrial take-up in the capital in Q1 2016 comprised transactions of between 1,858m2 and 4,645m2 (20,000 – 50,000 sq. ft.) in size. A further 23% of take-up in Q1 comprised transactions that extended to between 4,645m2 and 9,290m2 (50,000 -100,000 sq. ft.) in size. However, unlike several quarters in 2015, there were no large transactions extending to more than 9,290m2 (100,000 sq. ft.) in size signed in the quarter.

With many large industrial requirements fulfilled during 2015, the overall volume of demand in this sector fell quarter-on-quarter. There was more than 50,000 square metres of demand for industrial accommodation prevailing at the end of Q1 2016 of which 43% was focussed on the Dublin South West (N7) corridor. A further 38% of demand at the end of Q1 was focussed on the Dublin North East (N1/M1 corridor). Demonstrating the appetite for large premises, 44% of demand at the end of Q1 2016 was focussed on premises extending to more than 9,290m2 (50,000 sq. ft.) with a further 21% of active requirements at quarter-end comprising requirements for between 4,645m2 and 9,290m2 (50,000 -100,000 sq. ft.) of accommodation.

Prime headline industrial rents remained stable at approximately €75 per square metre during Q1 2016 but are expected to rise by as much as 25% during 2016 as the supply of modern accommodation dwindles further. Of the more than €735 million invested in Irish income-producing assets with a value of more than €1 million in Ireland in Q1 2016, only 2% comprised industrial investments specifically with industrial investment spend down quarter-on-quarter following a strong Q4 2015. Meanwhile, prime industrial yields in the capital are stable at approximately 5.75% at the end of Q1 2016.

Marie Hunt, Executive Director and Head of Research, CBRE Ireland
Although there was a healthy volume of leasing activity concluded in the industrial sector in the first quarter of 2016, this could have been considerably higher if there was sufficient stock available to satisfy occupier requirements. It is clear that there are severe shortages of modern industrial accommodation in some locations. Since the beginning of the year, there has been more discussion about speculative development in this sector although we don’t expect see this materialising to any great degree until such time as rents rise above current levels and render development viable.
Marie Hunt, Executive Director and Head of Research, CBRE Ireland



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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.