International real estate advisor Savills latest Industrial Marketwatch reports that the take-up of industrial space in the greater Dublin area to end September 2009 was 84,000 m². The report predicts total take-up for the year to be close to 100,000 m². This will be a drop of 33% on 2008 when total take-up in the greater Dublin area for the year was 147,000 m².
"This reduction in take-up is as expected and is in line with the level of adjustment in the economy and property markets that has taken place over the last year," says Joan Henry, Head of Research at Savills.
Availability has increased significantly with approximately 985,000 m² currently available in the greater Dublin area. This is a 42% increase on 2008 when approximately 692,000 m² of space was available. "With industrial market activity expected to remain subdued for the remainder of the year, we forecast that the amount of available space will reach a peak at 1 million m² by year end," said Henry.
"The increase in availability is being driven primarily by the considerable rise in the amount of space that has come to the market since January. This is primarily due to the fact that tenants are now exercising break options and are not renewing leases when they expire. Instead occupiers are consolidating their operations into existing premises in order to reduce costs. It is also being driven by the lower levels of take-up compared to previous years," says Gavin Butler, Director, Savills.
There has been a significant increase in the amount of space coming to the market, particularly in Southeast and Southwest Dublin. "In Southeast Dublin this has been driven by the fact that some of these premises had been earmarked for redevelopment. However, in the current climate those plans are now on hold and developers and owners are looking to generate cash-flows in the meantime" added Mr. Butler.
The trend towards letting rather than sales continues and Savills estimate that over 90% of activity in 2009 will be lettings rather than sales. "Leasing activity is expected to remain the dominant source of transactions for the remainder of 2009 and the first half of 2010," says Ms. Henry.
In 2010 Savills predicts that take-up levels will come under further pressure with rental deals critical. "In 2010 we estimate that take-up will be similar to the 100,000 m² level we are predicting for 2009. It will be 2011 before there is any significant increase in take-up levels," says Mr. Butler.
"Competition among landlords will continue to intensify as a larger volume of stock becomes available on the market. This has, and will continue to put downward pressure on rents and force landlords to deliver more flexible terms than in the past," he concludes.