www.dtz.ie
2
Dublin Industrial Report
The quantity of available space reached a new record high of 655,900
sq m at the end of September and showed little signs of easing. A
combination of weak demand coupled with strong levels of second
hand space released to the market underpinned the increase in the
supply during the quarter. The strength of supply is further evidenced
by the vacancy rate which rose to 16.2% at the end of the quarter.
Construction activity eased considerably over the past twelve months,
mainly in response to a number of factors such as weakening demand,
funding issues and rising supply levels. Speculative development
has ground to a halt, with limited new commencements during the
quarter comprising of design and build options.
Rents and capital values continue to come under pressure following
a combination of weak demand and elevated levels of supply,
however, evidence suggests a slowdown in the pace of decline.
Potential occupiers are fully aware of their position in the market
and are becoming increasingly more aggressive in their proposals.
Equally landlords are becoming more flexible on deals and adapting
their leases on offer accordingly, particularly in a bid to secure lease
renewals.
Transaction Activity
Transaction activity in the Dublin industrial market continued to show
signs of improvement during the third quarter of the year. At the end
of September the quantity of space taken up stood at approximately
22,400 sq m, representing a 5% increase in activity levels when
compared to the previous quarter. It is important to note that a third
of the space taken up during the quarter comprised a single letting
of approximately 7,300 sq m to Gallagher Motor Auctions Ltd at the
former Nissan Premises on the Naas Road. The quantity of space
transacted in the year to date stood at 58,200 sq m, approximately
74% below the level recorded in the previous year and further
highlights the scale of the deterioration in activity levels.
The level of net take up, which records the change in occupied
space, remained in negative territory during the quarter at -13,500 sq
m, highlighting the paucity of expansion in the market.
Demand continues to remain relatively strong for smaller sized
deals comprising units of 500 sq m or smaller. In light of the current
economic climate occupiers continue to remain cautious to commit
to larger sized deals, although there are still some sizable transactions
taking place in the market, including the recent pre-letting to Culina
SHS (Ireland) Ltd of a design and build unit measuring approximately
16,000 sq m. The unit is currently under construction in Aerodrome
Industrial Estate and not included in take up. In addition, enquiry
levels have picked up considerably during the three month period
despite the difficult economic climate and the associated impact on
confidence levels in the market.
Although recent data signalling that the worst of the recession may
be over, uncertainty surrounding the domestic economic outlook
coupled with difficulties securing finance and higher loan to value
ratios have continued to hamper demand. As a result, occupiers
are continuing to opt for flexible leasehold transactions over
freehold purchases as an occupational preference. The majority of
transactions in the year to date, 84%, comprised lettings. Anecdotal
evidence suggests an increase in the demand for shorter term and
more flexible leases among potential occupiers, owing not only to
credit securing difficulties but also reflects a more cautions attitude
with regard to re-location/expansion plans in the current economic
climate and perhaps a hope that conditions will improve in the short
to medium term.
The traditional industrial corridor of the South West region continued
to witness the strongest level of demand accounting for 46% of
all transacted space in the year to date. The North West region
accounted for 25% of all newly occupied space during the nine
month period. Anecdotal evidence suggests that quoting rents in this
region have been reduced significantly during the first six months of
the year with the decline moderating in quarter three, the results has
been higher levels of activity than in previous quarters. A further 16%
of space was absorbed in the South East region with the remaining
13% located in the North East.
Modern accommodation continues to be the preferred option among
those active in the market at present with approximately 69% of all
transacted space greater than 6.1 metres in height. A further 18%
ranged from 5.5 � 6.1 sq m, with the remaining space less than
5.5 metres in height. Headline quoting rents fell during the quarter;
however, the rate of decline was slower with prime rents and capital
values in the region of 100 - 1,830 per sq m respectively. While
quoting rents still remain relatively stable there has been a reduction
in actual rents being achieved. Strong incentives continue to play
a fundamental role in negotiations and in many instances rents are
being backed by significant rent free inducements and purchase
options, however this varies from lease to lease. The remainder of
2009 is likely to witness further downward pressure on rents however
rents appear to be nearing the floor.
Transacted Space by Eaves Height, Year to Date 2009
Source: DTZ Sherry FitzGerald Research

Page 1Page 2Page 3Page 4Page 5Page 6 Produced by PageSuite