New research from property advisor, Savills Ireland has revealed that 56,824m² of industrial & logistics space was taken up in Dublin during Q3 – up 5.5% on the same period in 2019. In total, there were 40 transactions, 75% of which were lettings totalling 38,800m² – reflecting the continuing lack of freehold opportunities available on the market. This brings take-up for the year to date to 189,218m² which is the lowest 3 quarters’ total over the last five years. However, according to Gavin Butler, Director of Industrial & Logistics in Savills, take-up has been hampered by an all-time low vacancy rate of just 1.9%.
With no supply of speculatively built stock anticipated to come on stream until Q2 2021 and over 35% of the current vacant stock over 30 years old, occupiers are extremely limited in terms of potential options. Just one new build was delivered to the market in Q3, Unit 633 Northwest Logistics Park, Dublin 15, totalling approx. 3,715m² which was speculatively built by Park Developments Group and let prior to completion on a new long term lease.
Interestingly, 91% of all new builds finished since 2016 have been let prior to completion, reflecting the lack of supply of good quality second-hand space coming to the market and the preference amongst occupiers to occupy new/modern stock despite the higher rents and longer lease terms required by landlords compared with second-hand buildings. The COVID lockdown resulted in delays to construction programmes and of the 37,140m² of new space due for completion in 2020, only 26,500m² will be delivered by year-end, 25,000m² of which has been pre-let.
Prime rents for new space have now risen to €112.50 per m² in 2020 with rental growth anticipated to continue into 2021 amid a backdrop of little or no availability. There are 8 buildings totalling 90,000m² currently under construction across 6 developments in Dublin, 3 of which are already committed. Based on current levels of demand and the tailwind expected for further demand for logistics space arising from Brexit, it is anticipated that the majority of this space will be taken up prior to completion.