A new round of industrial developments seems likely to get under way in Dublin because of the shortage of space available

By JACK FAGAN

Property Editor

THERE is a marked similarity between Dublin's office and industrial markets. Take-up of industrial space reached record levels last year and with the overall vacancy rate down to 5 per cent of total stock, there are now opportunities for speculative developments.

In the office sector, the vacancy rate has fallen to around 6 per cent and while there are signs of a shortage at the top end of the market, developers are still anxious to secure pre-lettings before embarking on a construction programme.

The latest report on the industrial market by the Palmer McCormack estate agency says the shortage of space is most acute in south-west (the area with the highest density of industrial buildings), where current availability equates to less than the average six-monthly take-up.

At the start the year, 1.1 million square feet of all types of industrial space was available in the Dublin area - 300,000 square feet lower than a year ago. The present vacancy rate of 5 per cent is 2 per cent below that of January, 1995. Based on last year's take-up, the current stock of prime space approximates to slightly over six months supply. In 1995, prime space accounted for 41 per cent of total take-up, showing a growth of almost 200,000 square feet on 1994.

The report estimates 1,329,000 square feet was occupied during 1995, compared with 1,145,000 square feet in the previous 12 months. And despite the perception the owner-occupiers were the dominant force last year, the overall tally shows that 63 per cent of all space was let to tenants.

Palmer McCormack says rental growth was clearly in evidence last year. However, the agency does not provide evidence of rents rising.

It says there was an "unprecedented" push from institutional clients for industrial investments with CityWest and Sandyford the main focus of activity. Yields in the sector hardened to as low as 8.5 per cent after costs, helping industrial investment maintain its dominance as the best-performing property sector over the last five years.

Rent increases and yield movements had a consequential impact on land values, with well-located zoned industrial land in high demand and fetching prices in excess of £200,000 per acre.

The report looks forward to the opening of the northern leg of the M50 motorway in November next. The impact of Dublin's orbital route in improving the accessibility of the traditional industrial locations in the southeast, south-west, north-east - and perhaps, more importantly the undeveloped industrial region of the north-west - is "inestimable", according to the report.

One of the key findings in the report is that Dublin's stock of industrial space continues to age with only 13 per cent of the total stock of 21 million square feet built in the last five years. The corresponding figure in January 1995, was 15 per cent.

The volume of new industrial space completed in 1995 reached 660,000 square feet and while this compared with an average of 250,000 square feet per annum in the period 1992-1994, it was still well down on the 1.3 million square feet completed in 1991.

Palmer McCormack says an obvious benefit of the more restrained level of new developments was the likelihood of sustained growth without the "boombust" influence which had been prevalent within the sector over the past 25 years. Notwithstanding the market's preference for sustained and continuous development, the lower level of completions had caused problems because of the age profile of Dublin's industrial stock.

Dublin south-west dominated .the letting market last year, accounting for more than 71 per cent of all deals. There is currently only 175,000 square feet of prime industrial space available in this area, says the report. The agency says the development of a major new business park in the south-west will help to alleviate the shortage of prime space in this area. There was a good supply of serviced land available, with 160 acres in Park West, more than 150 acres in CityWest and 50 acres at the M50 Business Park. "Given the paucity of, in particular, prime space but also secondary space in the market, a number of developers are likely to proceed with significant speculative development in the south-west for the first time since the late 1980s."