A host of overseas investors have begun to investigate the industrial and logistics market in Ireland, in the latest sign of growing international interest here.
While numerous big players from the United States and Europe have spent hundreds of millions of euro on Irish commercial property in the last two years, the overwhelming majority of that money has been spent on the office market, where prices are rocketing for high quality office blocks.
Last year close to €2bn worth of commercial property changed hands – the highest since the peak of the boom – but only a handful of deals in the commercial sector were worth more than €1m.
That is likely to change this year, however. The Sunday Independent understands that a number of international investors, including at least two well known private equity firms, have begun studying the industrial and logistics (I&L) market here and are in the hunt for bargains.
It is the latest sign of the growing interest of overseas buyers in property beyond the so-called prime investments around the capital.
While Ireland lacks the enormous 500,000 sq ft storage facilities that the likes of Amazon look for to use as distribution depots, the high level of e-commerce in Ireland is understood to make this country's warehouses attractive to potential buyers.
In its 2014 outlook, CBRE said the market was likely to at least match the transactional activity that occurred in 2013.
"With demand continuing to outstrip supply for well-located modern facilities, we expect to see an increase in industrial rents emerging in the capital for the first time in six years during 2014," said the firm.
"By year-end, we expect prime industrial rents in the capital to have reached €67.75 per square metre or €6.30 per square foot.
"This rental growth will be stimulated by the slow net absorption of quality accommodation along some of the arterial routes out of Dublin where supply shortages will ultimately emerge due to a complete lack of speculative development over the last number of years," CBRE said.
The firm's head of industrial and logistics in Ireland, Garrett McClean, echoed those views.
"Whilst conditions are in place in certain European markets for a widespread resumption of development in 2014, we do not expect to see any speculative development taking place in the Irish market.
"Other than build-to-suit schemes, the I&L development pipeline has been very thin for some time.
"That said, on a more positive note we expect prime Dublin industrial rents to increase by at least 15pc this year and we continue to witness the steady net absorption of quality industrial and logistics type stock around the M50."
Meanwhile, a new report from that firm claimed there were now strong conditions for rental increases and new development in the market across Europe.
The report highlights six trends to watch in the industrial and logistics (I&L) markets this year, including the reappearance of rental growth, continued investment momentum, and emerging markets growth as companies continue to seek supply chain efficiencies.
Investment focus shifted to the I&L sector last year and continued momentum is expected in 2014.
Partnership arrangements between specialist investor-developers and third-party equity capital from sovereign wealth funds and overseas pension funds underpinned a proportion of last year's turnover growth and this is expected to continue. Growing private equity interest is also evident, CBRE claimed.
This growth reflects wider acceptance of the investment rationale for the I&L sector for a range of investor types, beyond the conventional justification of a higher income return in a period of recovery.
Pricing in the better locations, including prime areas, will respond to the increase in investment activity and occupier demand levels will see some cyclical growth, adding further support to the investment case.
Nearly €15bn was invested in the industrial sector in Europe last year – the most since 2007.
CBRE's head of European industrial and logistics investment James Markby said the market was now expanding rapidly. "Investment in the I&L was the strongest of any sector last year increasing by 50 per cent with further expansion expected in 2014.
"The partnership arrangements between specialist investor-developers and third-party equity capital from sovereign wealth and overseas pension funds is similar to the US, where investment levels rose last year and cap rates are on a downward path; therefore, creating US interest in the European market," he added.
Among the major trends is the growing demand for super-sized "XXL warehouses" as companies seek economises of scale to cut back on their costs.
"The quest for efficiencies places a premium on highly accessible facilities and high through-put urban sites.
"Centralisation of operations and inventory control are among the key advantages of XXL warehouses that saw significant growth in demand last year," the firm said.