THERE HAS been a significant pick up in lettings of industrial buildings in the Dublin area during the first nine months of this year. Estate agents DTZ Sherry FitzGerald reported yesterday that an additional 126,100 sq m of space has been occupied so far this year, representing a 15 per cent increase compared to the same period in 2010.
However, the level of space transacted remains well below the pre-crisis peak levels.
Marian Finnegan, chief economist with DTZ, said the strong performance in overall volume of exports of goods and services had been one of the fundamental driving forces behind the improvement in market conditions since the beginning of the year. However, the export market remained vulnerable to shocks as a result of ongoing uncertainty on both sides of the Atlantic.
For 2011 as a whole, Finnegan estimates that the total volume of transacted space is likely to reach 150,000-160,000 sq m.
The report shows that since the onset of the downturn, the appetite for freehold purchases has been limited. Occupiers have instead been opting for more flexible leasehold transactions as an occupational preference. However, 2011 has seen renewed interest in purchase options, particularly in the last two quarters. About 34 per cent of the floorspace transacted in the year to date comprised sales. This compares to just 2 per cent during the corresponding period in 2010. The third quarter witnessed an increased number of large volume sales.
An analysis of the lettings by the estate agents reveals that the focus remains on shorter term and more flexibility in terms of the lease structure.
DTZ said supply levels in the industrial market continue to exhibit increasing signs of stability. The third quarter marked the second consecutive three-month period in which the total quantity of available space declined. “That said, the quarterly reduction was modest and the quantum of space available on the market remains a concern. The associated vacancy rate fell marginally to 23.8 per cent and remains significantly greater than than the market equilibrium.”
DTZ said the latest published list of properties subject to enforcement actions by Nama contained fewer industrial properties than anticipated. While a positive development for supply levels, uncertainty surrounded the rate of release of these properties on to the market.
Finally, the report acknowledged that prime quoting rents came under pressure during the last quarter, falling to €60 per sq m at the end of September. While the outlook was more stable, the balance of negotiating power remained with the tenant.
Quality in demand
United Drug has consolidated its position at Citywest in Dublin 24 by leasing a modern distribution headquarters at Magna Business Park. The company is likely to be paying €53 per sq m (€5per sq ft) for the 2,337 sq m/25,155 sq ft building on a short lease. The high-quality building has a fully racked warehouse and three loading docks. There are two-storey offices at the front of the building.
William Harvey & Co says there are some signs of improved demand in the market, particularly for high-quality buildings. The joint agents were Quinn Agnew
