- Supply increased by approximately 22% year-on-year and 4% quarter-on-quarter
- Take-up for Q3 2010 was 36,102 sqm, more than double that of Q2. This figure is somewhat distorted by the one large transaction completed in Blanchardstown
- Potential occupiers can obtain very attractive rental deals with significant incentives such as fit-out and/or rent-free periods on offer
- There was an increased number of properties on the market for sale in Q3
- There will continue to be little or no speculative development
- Download Lisney Industrial Market Update: Autumn 2010
Whilst the supply of industrial property has continued to increase this quarter, it is only up by approximately 4% from Q2. The Q3 take-up is more than double that of Q2 but is still well down on the Q1 figure. Occupiers are continuing to seek flexibility in all leases. There are more properties coming to the market on a "For Sale" basis and these are at realistic prices. However, this end of market continues to be slow and until such time as finance is more readily available, there will continue to be a large gap between what purchases can finances and what vendors expect.
Activity
Take-up of industrial space in Q3 was 36,102 sqm, more than double that of the preceding quarter. This figure is somewhat distorted by one large deal of a data centre in Blanchardstown. Excluding this transaction, take-up was still up by about 20% quarter-on-quarter. In Q4 we expect a similar level of take-up given the number of deals that we understand are agreed but not yet completed. This means that take-up for the year may reach 135,00 sqm, a 40% increase on 2009.
Supply increased by approximately 22% year-on-year to the end of September, up from 951,029 sqm in Q3 2009 to a current availability of approximately 1,158,427 sqm. However it has only increased by approximately 4% in the quarter.
Availability
Vacancy Levels continue to grow given the subdued demand and increasing supply. However, the pace of this growth has been declining over the past few quarters. With the exception of the south of the city, where supply reduced significantly in Q2, all Dublin geographical sub regions continue to be affected by increasing demand.
Demand
Demand for industrial property remains sluggish. Potential tenants are naturally indecisive regarding their property decision given the uncertainty surrounding business prospects in the short to medium-term. This is reflected in the flexibility they require in taking any lease. Potential occupiers can obtain very attractive rental deals with significant incentives such as fit-out contribution and/or rent free periods.
Exports & Industrial Production
The performance of net exports and industrial production has a direct influence on the demand for business property. As such, their relative importance cannot be underestimated. It is heartening to see that the most recent external trade figures from CSO illustrate that seasonally adjusted exports increased by 8% between June and July this year while imports decreased by 9%. This resulted in the trade surplus increasing by 29% to €4.2bn. On an annual basis, production for manufacturing industries was 12.4% higher in July 2010 than in July 2009. The most significant changes were in the 'basic pharmaceutical products and preparations' (+21.8%) and 'computer, electronic and optical products' (-19.5%).
Outlook
Year-end take-up will be well ahead of 2009 at around 135,000 sqm. There will continue to be limited sales transactions and no speculative development. Consolidation in many industries will present opportunities for well-positioned companies to acquire buildings both on a purchase and leasing basis. There will continue to wide spread variance in the rental levels achieved. Most companies will continue to require flexibility when leasing short -term space and all occupiers will be seeking improved premises and locations, which provide better value for money.
