Warehouses snapped up at record rate
MORE space in Dublin warehouses and logistics centres was taken up in 2013 than ever before, in the latest sign of a recovery in the commercial property sector.
Research from property agents Savills shows that businesses took up some 274,000sqm of industrial space in Ireland last year.
That is up 45pc year-on-year and the highest take-up rate on record. As a result, Savills say vacancy rates are likely to fall sharply this year.
And the recovery is now beginning to spill over to the battered retail sector as well, says Savills head of research Dr John McCartney.
"There is now a growing sense that we are beginning to see a real turnaround in the economy," he said.
"The manufacturing component of GDP, which is a critical driver of the demand for industrial space, increased by 2.1pc in the year to September. This momentum appears to have continued through the winter period with the manufacturing PMI registering growth for the eighth successive month in January," Dr McCartney added.
In addition to the improvement in Ireland's manufacturing performance, more recent figures show that retail sales are now also bouncing back. According to Dr McCartney, this will add further to the demand for warehousing space.
"Employment and household incomes are now rising, and this is feeding through to the tills with a 3pc uplift in retail turnover in the 12 months to December. In turn this is creating additional demand for logistics and distribution space," he concluded.
Despite increased demand, capital values for industrial space remain very low – and this means businesses are as likely to buy than rent, said Savills' industrial director Gavin Butler.
"With market prices currently running at around half the cost of developing buildings, it has simply never been cheaper to buy industrial property in Dublin. As a result, sales increased from 20pc of market transactions in 2012 to 47pc last year," Mr Butler said.