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 – 50,000ft²) in size. A further 23% of take-up in Q1 comprised transactions that extended to between 4,645m2 and 9,290m2 (50,000 -100,000ft²) in size. However, unlike several quarters in 2015, there were no large transactions extending to more than 9,290m2 (100,000ft²) 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 50,000m² 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 (50,000ft²) with a further 21% of active requirements at quarter-end comprising requirements for between 4,645m2 and 9,290m2 (50,000 -100,000ft) of accommodation.
Prime headline industrial rents remained stable at approximately €75/m² 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 €735m invested in Irish income-producing assets with a value of more than €1ma 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.
According to Marie Hunt, executive director and head of research at 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”.
