While 2014 was the busiest year ever in terms of the Irish property investment market with more than €4.4 billion worth of properties sold, it also may have marked a turning point for the languishing industrial market.

The latest research from estate agency Lisney found that the Dublin industrial market experienced its largest ever quarterly take-up figure in Q4 of 2014.

“Last year got off to a slow start,” says Lisney, “but activity in the industrial market flourished in the second half of the year to finish at around 353,000sq m of space either leased or sold to owner-occupiers by year end.

“Sales dominated activity, accounting for 84 per cent of all space transacted in 2014. With capital values less than half the replacement cost, it made sense for occupiers with funds available to buy a building rather than rent it. Most were funded in cash, but as the year progressed smaller elements of finance crept in to the market. The cost of servicing a mortgage annually was often substantially less than the rent. There was also the added advantage of the CGT waiver.”

The research notes that while “speculative construction” in the industrial sector “is still a couple of years out”, there will be design-and-build agreements reached in 2015 whereby a developer will enter into a pre-letting or sale agreement with an occupier.

“This will be at the larger end of the market, for specialised industrial buildings greater than 7,000sq m.”

The amount of available industrial space reduced in 2014, most notably in the last quarter, and this was particularly the case in southwest and northwest Dublin. However, the overall vacancy rate for Dublin remained relatively high at around 18 per cent.

Retail

Demand for space in the Dublin retail market is focused on prime pitches, according to Lisney.

“Grafton Street, Henry Street and the key suburban shopping centres attracted some top retailers in 2014. Vacancy rates in these areas were very low and by the end of the year, it was notable that Grafton Street was 100 per cent let. However, provincial high streets and some town centres did not fare so well with some continuing to struggle to find occupiers.”

Despite this, the agency says demand for space will spread out from prime pitches in 2015 while vacancy rates in secondary locations will start to come down.

Land

Lisney says 2014 was the strongest year since 2007 in the development land market with supply, demand, activity and values all increasing, most notably in the Dublin region.

Shovel-ready sites attracted substantial premiums and the key focus will be on suburban residential lands and high-profile mixed-use city centre sites. This is due to the supply shortages in both residential and prime modern office accommodation.

“It was also evident that local developers and international financiers were joining forces in 2014,” according to Lisney.