New industrial space has taken hold as demand soars for commercial property in Dublin

Logistics companies, pharmaceutical companies and large retailers have taken over almost all of the new industrial space being built in Dublin.

Between April and June, 89pc of the 459,000 square feet of new space completed in the quarter was pre-let, according to a survey by real estate agent Savills.

The largest transaction of the quarter was the expansion of Dunnes Stores into a 78,400 square foot space in Stadium Business Park in Finglas.

Third-party logistics provider GLS, US clinical packaging specialist Yourway and pharmaceutical company Clinigen have also increased their presence.

Market take-up totaled 1.3 million square feet in the first six months of the year, despite fears of an economic slowdown, Savills said.

The industrial and logistics market is heating up due to a lack of supply, especially for small units.

Only one small deal was signed in the second quarter – for a 5,000 to 10,000 square foot unit – the lowest demand since the 2008 financial crisis.

Despite this, building activity in Dublin’s industrial property market has reached a 20-year high, according to commercial property firm Cushman & Wakefield.

Although there is less space available than at any time since 2002, more space has been added so far this year than in all of last year.

Nearly two-thirds (61pc) of the space under construction has been pre-let or pre-sold, including to German freight company DB Schenker, the Office of Public Works and retailer LifeStyle Sports.

“We expect to see more transactions as units move closer to completion,” said Cushman & Wakefield chief economist Kate English.

“The amount under construction is substantial. This is the largest volume of space under construction since 2002, which will be good news for potential occupants because this space is needed.

Lack of space and skyrocketing construction costs are driving up rents but not denting market demand, said Brendan Smyth, head of industry and logistics at Cushman & Wakefield.

Dublin prime rents stood at €115 per square meter at the end of June.

“This is being absorbed by the market, with further rental growth expected in the coming months,” he said.

“Confidence among developers of new build logistics spaces remains high as the market struggles to supply enough buildings to meet market demand.”

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