Strong growth in industrial market as first quarter figures reach 2008 high

Take-up of industrial space in the first quarter of 2015 was more than 107,000sq m (1.152 million sq ft), a 72,000sq m (775,000sq ft) increase on the same quarter last year and the highest Q1 figure recorded since 2008.

This is according to the latest research on the sector from agent Savills which points to increased goods traffic through Dublin Port as the main driver behind the growing demand for warehousing space.

John McCartney, economist and director of research at Savills Ireland, said cargo volumes at Dublin Port rose by 5.3 per cent in Q1, its best Q1 result in 10 years.

“While imports and exports work against one another in the national accounts calculations, both types of trade lead to demand for transport and logistics services, and this ultimately benefits the industrial property market,” he said.

Among the major industrial deals in Q1 2015 was the sale of the 21,582sq m (232,306sq ft) Alcatel Lucent facility in the IDA Business & Technology Park, Dublin 15 and the sale of the 14,924sq m (160,640sq ft) Amcor unit at Jamestown Road in Finglas.

Of the major lettings, the leasing of 6,280sq m (67,600sq ft) at Units 1 & 2 in JFK Park in Dublin 12 was the largest in Q1. It was followed by 3,578sq m (38,513sq ft) at 6B Northern Cross Business Park in Finglas.

With industrial capital values still well below reinstatement cost, there is still strong demand for industrial property from owner-occupiers.

"As a result, outright sales accounted for 71 per cent of all transactions and eight of the 10 biggest deals in Q1," says Gavin Butler, industrial director at Savills Ireland.

Savills suggests that growth in both exports and imports will continue to drive the demand for warehousing space. As a result the industrial property market should continue to tighten with further growth in capital and rental values.

“With capital values recovering from a very low base and interest rates remaining flat, there will continue to be strong sales activity in 2015,” Butler said.

“Moreover, with no new supply of industrial space expected before 2017, growth in capital and rental values will increase further in 2015 and 2016.”