Buyers account for half industrial deals in Q2
About 20 industrial buildings were sold in the second quarter of the year, accounting for almost half of the industrial and warehouse property transactions in the quarter.
According to estate agency Lisney, take-up in the sector at 59,000sqm was only 1.6pc less than the first quarter of the year. But on the other hand, Cathal Daughton of Lisney points out, the first quarter saw a few larger transactions while the second quarter saw more smaller transactions, and indeed there was a 63pc increase in transactions compared to Q1.
CBRE director Garrett McClean says 23 letting transactions accounted for 30,362sqm of take-up in Q2, while 21 sales with a combined 27,302sqm were completed during the three-month period.
He estimates take-up at a slightly lower 57,664sqm in the latest quarter and points out that industrial take-up in the first half of this year was up almost 20pc ahead of the first half of 2012.
Prime Dublin industrial rents remained stable for the sixth consecutive quarter at €60 per sqm during Q2 2013, while prime industrial yields in the capital averaged 8.75pc at the mid-year point.
Lisney reckons that despite increased supply and flat demand, industrial rents are increasing while yields are narrowing. Supply increased by 2.5pc over the quarter, bringing the year-on-year increase to 14pc and available space now stands at 1.37 million sqm.
However, the two agents differ on a number of aspects of the industrial market.
CBRE says activity is dominated by a number of large transactions from a range of corporate occupiers including pharmaceutical companies, research and development companies, data centre operators and medical device manufacturers.
"Transactional activity in the industrial sector during Q2 2013 was primarily focused on the Dublin North East (N1/M1) corridor, which accounted for 35pc of all Dublin sales and lettings."
Lisney says a majority of 36 transactions are for units of less than 2,000sqm and 17 of these were in the south-west area of Dublin, where there are a lot of smaller units.
Both report two deals in excess of 7,000sqm. The largest was United Drug's acquisition of the 8,000sqm Unit 21 Fonthill Business Park in Lucan.
Lisney also believes that it will be difficult to maintain the latest level of deals but there may be some minor rent increases for large modern buildings.
Supply of properties for sale at realistic prices will continue to increase, as evidenced by the sharp rise in sales transactions in Q2.
"However, the majority of sales will be limited to those with available cash. Certain sized and well-located modern buildings will attract competitive bidding," Daughton adds.
While he rules out speculative short-term development, both he and McClean point out that the largest design and build project for years, expected to be built on a site near Dublin airport, the Cherryhound and the N2 interchange, sold recently, demonstrating the trend of industrial occupiers purchasing land to develop bespoke facilities on a design and build basis.
Although two industrial investment transactions of more than €1m in value signed in the Dublin market during the first quarter of 2013, there were no industrial investments of more than €1m in value signed in Dublin in the second quarter of 2013. In total, only 1pc of the €603m of investment spend in the Irish market in the first half of 2013 comprised industrial properties.
However, there has been a notable increase in demand from investors for prime industrial and logistics buildings over recent quarters.
CBRE believes that prime industrial yields now stand at approximately 8.75pc, having hardened by a further 25 basis points over the most recent quarter.