Growing demand for logistics space pushes occupiers towards pre-lets

Savills: 'With pipeline supply well contained and limited standing stock we have seen upward pressure on rents.'

The number of commercial property transactions in the industrial and logistics sector surged by 66% in the third quarter according to a new report from estate agents Savills.

The property advisors said 712,000sq ft of space transacted in Dublin, significantly higher than the previous two quarters and an increase of 33% on the same quarter in 2020. 

The increase occurred despite a severe constraint on supply with a vacancy rate of just 1.2% at the start of the quarter.

The lack of newly built industrial and logistics space meant three of the top five deals this quarter were pre-lets accounting for almost a third of the space that transacted during the quarter. 

“The dearth of suitable stock is particularly apparent in the sales market with only seven sales out of a total 23 transactions during the quarter," Gavin Butler, director of industrial and logistics in Savills. 

Despite accounting for almost a third of transactions, sales to owner-occupiers only accounted for 12% of the volume of space that transacted. 

"This reflects a lack of opportunities for owner-occupiers with large requirements.”

“With pipeline supply well contained and limited standing stock we have seen upward pressure on rents," he said. 

The Savills report said rents for prime stock have increased from €10.50 to €11.00 over the last year, representing an increase of 5%. 

"This pressure has fed through to the secondary market which has seen rents increase from €6.50 to €7.25 over the period, an increase of 11%," Mr Butler said.