Industrial take-up is higher than last year, say reports
take-up of Irish industrial space this year could exceed the levels achieved last year, according to one of a number of third-quarter reports.
According to two of them, Lisney and Jones Lang LaSalle (JLLS), take-up this year could exceed 180,000sqm and JLLS says says take-up could be 20-30pc greater than last year.
JLLS industrial director Nigel Healy says that rents for some of the larger quality properties may increase.
"We are beginning to see some real evidence of stabilisation of rents which now stand at €5.50 per sq ft for prime and €3 to €4 per sq ft for secondary. There is evidence that in some locations rents up to 10pc higher are being achieved," he adds.
On the other hand Lisney research says there continues to be a wide variance in the rental levels achieved.
"Rents for the remainder of 2012 will be hugely dependent on the flexibility required by the tenant. Tenants who are willing to accept longer lease terms will benefit from more favourable rents," says its head of research Aoife Brennan.
Lisney estimates Q3 take-up at 54,000sqm and CB Richard Ellis at 56,600 sqm and the latter adds: "Although Q3 take-up was below that in Q2, the volume achieved in the first none months of the year was the highest in five years."
The quarter saw a 40pc increase in take-up compared to the same period last year with 27 transactions in Q3 2012 bringing to 78 the number of deals in the year to date.
A quarter of the transactions were sales and the majority were of less than 2,000 sqm. Lisney says supply levels continue to increase with 1.23 million sqm of accommodation available.
Of the deals done, two were in excess of 7,000 sqm including the sale of a 13,711 sqm building on Robinhood Road in Ballymount and nearby on Ballymount Road Lower, the second was a letting of 12,235 sqm to Euro General.
The amount of available accommodation increased by 12pc year-on-year to the end of Q3 and in the quarter it increased by 2.7pc.
Supply in the northwest and southwest regions remained relatively static in the quarter.
However, there were notable increases in the south region up 17pc and the north region up 6.3pc.
"It is likely that we will see further increases in supply in all regions in the final months of the year," says Lisney's industrial expert Cathal Daughton.
In spite of this larger buildings in excess of 7,000 sqm are relatively scarce as take-up of these buildings has increased since 2010.
Since the start of 2012, there has been a noticeable increase in the number of enquiries from occupiers looking to purchase rather than to rent.
"As many properties can now be purchased for less than 50pc of the cost of construction, it is an excellent time for those with access to funds to buy. Many tenants can now pay back a loan on a property at a fraction of what it would cost them to rent. This is even in spite of the large reductions in rents seen over the last five years," Ms Brennan says.
While ruling out speculative development in the near future, she says some contractors may get commissions to design-and-build larger specialised premises next year.
The number of properties coming to the market on a for sale basis will continue to increase, however, actual sales transactions will more than likely be limited to those with a large portion of the purchase price available in cash. In certain circumstances, larger, well located, modern buildings may attract competitive bidding.