Dublin Industrial takes surprising upswing in H1 12
According to the latest Dublin industrial research report from international real estate advisor Savills, the city saw take-up reach just under 91,000 sq m in H1 2012, which is a significant increase on the same period in 2011 and already represents over 60% of last year’s total take-up of 148,000 sq m. The firm also notes that Q2 2012 take-up levels reached 67,000 sq m, which is a considerable rise on the Q1 2012 figure of 24,000 sq m, and expects overall industrial take-up in Dublin to reach between 150,000 sq m and 175,000 sq m by the end of the year.
In terms of the number of deals, Savills research shows that a total of 57 deals were completed in the first half of the year breaking down to 20 in Q1 and 37 in Q2. The average deal size for this period was 1,450 sq m with 15 of the 37 deals for space in the sub-1,000 sq m bracket.
Joan Henry, Research Director in Savills Ireland, comments: “We have seen a substantial increase in the industrial leasing market in Q2 2012, which is obviously a good indicator for the market. This activity continues to be dominated by the southwest, which accounted for 54% of total take-up in the second quarter, followed by the northwest representing 29%.”
Savills confirms that there has been an increase in new stock coming to the market, with the current vacancy totalling just over 1.4m sq m. The firm notes that this could go some way to explain why the pendulum has swung firmly in favour of tenants with prime rents adjusting considerably over the last 24 months. Prime rents are now reported at between ?40 and ?60 per sq m / pa.
Gavin Butler, Industrial Director at Savills Ireland, says: “In terms of outlook for the rest of 2012, managing and minimising void costs is set to remain a key priority for landlords as the trend of an increase in stock continues, albeit at a slower pace. While we do not expect to see any significant decrease in prime rents following the adjustment over the last two years, landlords have recognised the need for flexibility in order to secure deals.”
With regards to the Dublin industrial investment market, Savills confirms that capital values remain under pressure with costs in the current market context making any speculative development uneconomical. Prime capital values are estimated to be in the region of ?430 and ?600 per sq m.