According to the latest Dublin industrial report from international real estate advisor Savills, industrial occupiers looking for new space in the city are set to benefit from more attractive lease terms in 2012 as landlords recognize the increasing need for flexibility. This has been driven by a growth in stock coming to the market in the past three to four months with 1.4 million m² of space now available.
Savills notes that this increase has been particularly significant in the southwest pocket of Dublin, which has seen an increase of almost 60,000 m² of space on the market in the last two quarters.
Gavin Butler, Industrial Director at Savills Ireland, comments: "Following growth in new industrial stock coming to market, Dublin has witnessed an inevitable adjustment in rents with landlords continuing to realign their expectations in order to attract occupiers and prevent void costs. This has resulted in a decrease in the gap between prime and secondary rents which now stand at 40-60/m²/per annum and 20-40/m²/per annum respectively.
Savills research states that total industrial take-up in Dublin during Q1 2012 reached just over 27,000 m². Of the 20 deals that were completed in the first quarter of this year, 12 were in the southwest of the city, which reflects the continued demand for space in this area that has carried over from 2011.
Looking forward, Savills forecasts that overall industrial take-up will reach between 125,000 m² and 175,000 m² by the end of the year, which is in line with the 141,000 m² recorded for 2011. This demand is expected to be driven by the ICT, distribution/logistics, retail, motor sales and recycling sectors.
Looking at the industrial sales market in Dublin, Savills notes that the southwest continues to remain a favoured area for purchasers with four of the five sales in the first quarter of the year taking place in this area of the city. Significant deals include the sales of 1,268 m² Chapelizod Industrial Estate for 110 per m² and 1,086 m² at Northwest Business Park in Ballycoolin for 506 per m².
Joan Henry, Director of Research in Savills Ireland, says: "The increase in stock coming to the market in Dublin is being driven by overall market conditions and an increasing number of banks and receivers bringing properties to the market, which we expect to continue for the foreseeable future."