Q3 sees a surge in industrial activity
The level of industrial activity experienced a significant uplift in the third quarter thanks to three transactions greater than 80,000 sq ft, according to the latest research released by JLL.
While the 36 deals conducted in the three-month period to the end of September equalled the performance for the second quarter, the increase in the number of larger-sized deals, including one greater than 200,000 sq ft, boosted the total take-up of space to 898,073 sq ft. Total take-up for the year to date is 1.9 million sq ft.
Commenting on the performance for the industrial sector, JLL's head of research, Hannah Dwyer, said: "It is positive to see that industrial occupier activity remains strong with an 80pc increase in take-up compared to the last quarter (494,658 sq ft). The outlook for the fourth quarter is positive, with continued strong demand expected. We are forecasting that total volumes for 2016 could exceed 2.5 million sq ft. Although this would be a decrease from 2015, it is still a strong volume of activity for a market of Dublin's size."
Dwyer said the greatest issue now affecting the industrial sector was the limited availability of prime space in core locations.
"The lack of supply of prime is driving activity for secondary space, which in turn is also driving both prime and secondary rental values," she noted.
Currently, the only major industrial scheme under construction is Green Reit's development at Horizon Logistics Park.
A second scheme - the Rohan Holdings development near Dublin airport - is expected to move on site in the fourth quarter.
JLL said it anticipates that the level of speculative development will remain limited as rents still need to increase to an "economic level that justifies cost".
CBRE, meanwhile, recorded a slightly higher level of industrial activity for the third quarter, with 40 deals accounting for 92,425 sq m (994,854 sq ft) of take-up. The firm noted, however, that industrial take-up in the first nine months of 2016 was down 31pc on the equivalent period in 2015.
This, they said, was "reflective of a severe scarcity of modern accommodation in core locations, as opposed to a weakening in demand levels".
Director at CBRE Ireland's industrial department, Jarlath Lynn, said: "We expect to see continued activity in this sector in the final quarter of 2016 although with supply shortages continuing to prevail, we expect to see further tightening in tenant inducements in leases over the course of the coming months. We also expect to see prime industrial rents rising further by year-end."
CBRE says upward pressure on prime industrial rental values will improve the viability of new development in the industrial sector and should see an increase in speculative development in due course.