First quarter industrial take up hits 66,000 sqm
Take-up in the industrial sector during the first quarter of the year topped 66,000 sq m, a new report from Savills has found.
The broker says that while the total amount is lower than the same period a year ago, it is still higher than the average first quarter take-up of 60,000 sq m over the last five years.
Savills Ireland director of commercial Gavin Butler (pictured) commented: "This lower level of take-up compared to Q1 2015 may reflect the absence of the capital gains tax incentive which drove the market in 2014 and early 2015.
"However, it is more likely a reflection of the growing scarcity of modern stock in prime locations, which is making it quite challenging to meet the demand for space out there."
Overall, demand for quality industrial space remains strong, and this is likely to make development more viable, according to Mr Butler;
"With the availability of good quality units becoming scarce, developers are now once again beginning to build speculative space.
"One such example is Rohan Holdings which plans to begin the development of units ranging in size from 1,000 to 6,000 sq m at North City Business Park, Dublin Airport Logistics Park and on lands near Citywest just off the N7 later this year.
"However, it will be 2017 before any of this space is delivered, meaning, in the absence of new supply, capital and rental values are set to rise further."
From an economic standpoint, the report notes that despite a slowdown in global manufacturing and increased uncertainly in the UK arising from a potential Brexit, indicators at home continue to suggest that firms here are weathering the tougher external climate, said Savills director of research John McCartney (below).
"We are simply producing and buying more stuff," he said.
"Between the factory and the consumer all of this needs to be transported and warehoused, and that is creating a need for logistics space. With the economy set to grow further over the next two years, this demand will only increase," he added.
Savills also notes that outright sales of industrial property accounted for over 50pc of transactions in Q1. This is a low proportion by historical standards and probably reflects the scarcity of debt finance that is available to buyers. In keeping with this, most of the sales that have taken place have been cash funded.