More industrial and logistics property is under construction in the Dublin region than at any point since 2002, according to new research released recently by commercial real estate company Cushman & Wakefield.
As availability levels are at a 20-year low, the figures show the market is responding to a pent-up demand for modern, high quality space, demonstrated by the 61,000 sq m of new space sold or leased by an occupier in the second quarter of this year alone.
Cushman & Wakefield expect that 74,085 sq m of new industrial & logistics space will be completed and added to Dublin market by the end of June.
This surpasses the total completed in 2021 and is one of the highest volumes since 2008, 88 per cent of this was let to an occupier before or upon completion, emphasising the significant demand in the market.
Some examples of these include DB Schenker, the Office of Public Works and LifeStyle Sports.
Development activity is expected to continue in the industrial and logistics market during the second half of the year. A total of 228,200 sq m was under construction as of the end of June, with expected completion dates ranging from 2022 to 2023.
Commenting on the launch of the research, Kate English, Cushman & Wakefield’s chief economist, said: “Almost 61 per cent of space under construction is already pre-let or pre-sold to an occupier, with pre-lets proving much more popular.
“Further units have terms agreed, and we expect to see more transactions as units get closer to completion. This would be in line with patterns we have observed over most recent quarters. The sum under construction is substantial. It is the highest volume of space under construction since 2002, which will be welcome news to potential occupiers as this space is needed.”
Cushman & Wakefield’s research also found that industrial and logistics units of all sizes and in all locations continued to see rental growth as competition remains high for a very limited number of units.
The sector as a whole is undergoing an evolution, with the rise in demand evident not only within Dublin, but also across most other European markets. Dublin prime rents are at €115 per sq m as of the end of Q2 2022, with further rental growth expected over the remainder of the year.
Brendan Smyth, head of industrial and logistics at Cushman & Wakefield, said: “Confidence within developers of new build logistics space remains high as the market is struggling to provide sufficient buildings to meet market demand. While construction inflation is pushing up the cost of new builds and subsequently rents, this is being absorbed by the market with further rental growth expected in the coming months.”
Cushman & Wakefield is among the largest real estate services firms with approximately 50,000 employees in 400 offices and 60 countries. In 2020, the firm had revenue of $7.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services.