Demand for industrial space is being driven by a resurgent logistics sector according to property consultants, Savills Ireland.
In its latest commentary on Dublin’s industrial property market, Savills reports that transport and storage operators accounted for 29% of the industrial space taken-up in Q1 2014.
Commenting on this trend, Dr. John McCartney, Economist and Director of Research at Savills noted that the logistics sector is fast becoming a star-turn of the Irish economy;
“Last week’s live register figures confirm that the labour market is continuing to perform well with the number of people signing-on falling for the 29th month in succession. But what may surprise people is that almost 10% of all the jobs created over the last 6 months have been in the transport and storage sector.”
In other evidence that the logistics sector is heating up, Dr. McCartney points to a 53% year-on-year increase in the number of commercial vehicles licenced, and increasing activity in the market for distribution and storage space;
“When it comes to industrial space we tend to think of factories, but warehousing, storage and distribution facilities are now becoming a much more important part of the industrial property landscape”.
According to McCartney, this reflects an ongoing shift in the nature of Ireland’s economy from manufacturing to services. But it also reflects a more recent recovery in Ireland’s consumer economy which is putting pressure on distributors and retailers to get goods to the customer more quickly.
“Total employment has increased by 3.3% in the last year, and this has led to a restoration of confidence among consumers. Reflecting this, retail sales are up 8.9% in the year to March. This is having a knock-on effect on the industries that support the retail sector, and it is driving the demand for logistics property.”
Savills’ report highlights that the total number of industrial property transactions increased by 11.4% year-on-year in Q1 2014, while total take-up was 45% higher than in Q1 2012.
Approximately 35,000 sq.m. of industrial space was taken-up in Q1, however, this was one third lower than the same period in 2013. Savills say that this reflects the fact that very few deals were carried over from Q4 2013, when a new record for industrial take-up in Dublin was set.
Commenting on the Q1 transactions, Gavin Butler, Director of Industrial at Savills Ireland said;
“Sales transactions accounted for over half of all industrial transactions in Q1 2014 – the highest proportion recorded since 2008. These transactions continue to be driven exclusively by cash buyers with owners having a preference to engage with cash buyers over those with loan approval. However, we expect to see an increase in the number of financed sales as the year progresses.”
The largest transaction so far this year was the sale of a 3,000 sq.m. facility in Airton Road, Tallaght, Dublin 24. The largest letting was a 2,000 sq.m. modern logistics facility at North Dublin Corporate Park, Swords, Co. Dublin.