Friday 24 November 2017

Industrial market set for busiest year in a decade

The industrial sector is on track for its best year since at least 2005.
The industrial sector is on track for its best year since at least 2005.
Peter Flanagan

Peter Flanagan

This year is set to be a record one for the industrial market, with takeup in the sector already higher than any point in the past decade.

According to JLL, some 3.1 sq ft of space has been signed for in the first nine months of 2015. That is higher than the annual totals going back to at least 2005. JLL estimates that 981,483 sq ft of industrial space was occupied between July and September across 44 deals.

Any move in the industrial market will be welcome as it is one of the few areas of he market that has seen little significant movement while other branches of the market such as the office sector, have posted strong growth.

According to JLL, there were four transactions greater than 50,000 sq ft during the third quarter which boosted total volumes considerably.

JLL Ireland head of research Hannah Dwyer said the improvement was to be welcomed given the struggles of the market in recent years.

"It is positive to see the industrial market continue to perform strongly in terms of demand. Year-to-date volumes for 2015 have exceeded the highest annual level for 10 years. If Q4 performs as strongly as the first 3 quarters in the year, we may see take-up exceed 4m sq ft, which would be the highest level achieved since our records began.

"The greatest threat to this occurring is the lack of availability of prime stock which is impacting occupier choices. There is evidence of occupiers being forced to consider non-prime space or alternative locations," she said.

Prime rents have experienced further growth in Q3 and now stand at €7 per sq ft. Secondary rents remain unchanged this quarter at €4.50 per sq ft.

Further afield, there have been reports of properties being marketed for as much as €10 or €12 per sq ft.

JLL director for industrial Nigel Healy added that "We are still aware of only one large-scale scheme in Dublin that is currently under construction, which is the Green REIT development at Horizon Logistics Park.

"It is hoped that as supply continues to tighten, we will start to see more signs of development activity, which the market desperately needs. With no additional supply to be brought to the market, and continued strong demand, we expect to see prime rental growth in the next quarter and next year. We expect to see deals achieve €7.50 per sq ft in the next three months, and by end-2016, we are forecasting that rents will achieve €8.25 per sq ft for good quality existing stock," Mr Healy said.

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