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4
Availability
ThesupplyofaccommodationintheDublinindustrialmarketcontinued
its upward trend during the quarter, however, at a much slower rate
than witnessed in previous quarters. The quantity of available space
reached a new record high of 655,900 sq m at the end of September.
A comparison with the same period in 2008 reveals a 31% increase
in the level of vacant space. The steady rise in availability over the
past twelve months reflects a large amount of second hand space
that was released to the market.
Reflecting the rise in availability, the vacancy rate increased to reach
16.2% compared to 12.3% at the end of September 2008. Given
the prevailing challenging economic environment coupled with
subdued occupier demand, the strength of supply in the market is
now a concern. Deteriorating economic conditions have impacted
employment levels with more consolidations and closures evident. The
result has been a large quantity of surplus accommodation entering
the market. Further contraction in the labour market is expected
throughout the remainder of 2009 and 2010 with the inevitable result
being upward pressure on the vacancy rate and downward pressure
on rents and capital values.
On a positive note, the quantity of available space under active
negotiation at the end of the quarter rose to 13%. This represents a
significant increase on the previous quarter and if transacted could
potentially reduce the vacancy rate to 14.1%. Nevertheless, this still
remains double the equilibrium level of 7%.
An analysis of the spread of available space reveals that the South
West continued to account for the majority of accommodation, 48%.
This includes a number of very large premises such as the Former
Sercom Premises in Cloverhill industrial estate and the former Coca
Cola facility on the Naas Road. A further 35% of accommodation is
located in the North West. The North East accounted for 14% while
the South East continues to suffer from limited supply accounting for
only 3% of available space.
An analysis of the length of time that space has been available reveals
that only 36% of all vacant accommodation has been on the market
for a period of twelve months or less, indicating that a significant
proportion of this vacant space is older stock that has been on the
market for a considerable number of years and therefore arguably
masking the true vacancy rate in the market. There are a number
of large older facilitates that have remained on the market for a long
period of time which may not reflect occupier demand. For example
approximately 18,700 sq m at the former Sercom premises, this has
been on the market since the second quarter of 2005. In terms of the
age profile of available space, 12% is less than 5.5 metres in height
while a further 27% ranges between 5.5 and 6.1 metres in height.
This would suggest that much of the available space comprises older
stock and as a result may not meet occupier requirements.
Available Industrial Space by Region, Q3 2009
Source: DTZ Sherry FitzGerald Research

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