Cheryl Freedman paints a positive picture of Dublin’s industrial sector.
If “why rent when you can buy?” was a war-cry from the mortgage hungry in the early 1980s, it still echoes in Dublin’s industrial scene.
Continued low interest rates and a prosperous economy have conspired to ensure that the market remains dominated by owner-occupiers rather than lease led. A Sherry Fitzgerald report last month estimated that only 35% of companies looking for space were prepared to rent.
Owner-occupier deals are not only more abundant – they tend to be larger as well, according to Caleb Kyle of Hamilton Osborne King: “Most of the lettings are between 929m2 and 2,787m2 (10,000 sq ft and 30,000 sq ft), because it’s still such a small market compared to the UK. There are very few 7,432m2 to 9,290m2 (80,000 sq ft to 100,000 sq ft) deals done, and when they are done they are owner-occupier.”
Rising demand
All in all, Dublin’s industrial picture is a positive one. Rising demand is pushing rents of I£65 per m2 (I£6 per sq ft) and purchase prices upwards of I£592 per m2 (I£55 per sq ft). Jones Lang Wootton’s Irish property index shows that industrial rents are up by 11.7% in the year to June 1996.
“Demand has been very strong, and is steadily growing,” says Derek Noble of Hamilton Osborne King. “Demand for new space is being pushed up all the time. New developments are reaching the prices of 1988.”
Vacancy rates, says Kyle, have dipped to 5%, while agents generally report an upturn in values of secondhand buildings. But despite widespread reports of imminent shortages of good space, Sherry Fitzgerald estimated that in June there was actually 176,510m2 (1.9m sq ft) of vacant space available. Further analysis revealed, however, that this did not always meet specific demands – only a quarter was available for purchase rather than leasing. And, while 43% of market demand is for properties less than 465m2 (5,000 sq ft), only a fifth of available space matches up. To fill the gap, 69,675m2 (750,000 sq ft) of speculative industrial space is being built, according to Hamilton Osborne King estimates.
A considerable chunk of this can be found at the 10.9ha (27 acre) Airport Business Park, where developer Cargo Bridge plans 37,160m2 (400,000 sq ft) of industrial and office space. Agent Hamilton Osborne King claims that it is Ireland’s biggest speculative industrial scheme for two decades.
Phase one, comprising 10,684m2 (115,000 sq ft) in 13 units, is now being built. Hamilton Osborne King is quoting I£646 per m2 (I£60 per sq ft) to buy and I£65 per m2 (I£6 per sq ft) to rent. Neptune Freight has already occupied 6,039m2 (65,000 sq ft) of high-bay warehousing and offices at the park.
Derek Noble of Hamilton Osborne King admits that the area around the airport “has been hampered by a lack of proper drainage and sewerage facilities”. However, full industrial use is being applied for.
The park is just one of several schemes taking place north of the capital. As the M50 ring road closes around Dublin, it forms a natural path for industrial parks to follow. The new Northern Crossway section should open at the end of the year.
“It is having a huge effect on the development on the north side of Dublin,” comments Kyle. William Tuite of Jones Lang Wootton adds: “The extension of the M50 dramatically reduces journey time. It will open up land and make it much more accessible.”
In his opinion, land values near the new M50 can reach up to £494,193 per ha (£200,000 per acre). Hamilton Osborne King recently sold 7ha (18 acres) of land near the airport to Park Developments for I£2m.
At Bill Kilmurray’s I£12m Woodford Business Park, Santry – a 5.7ha (14 acre) site, 1 mile south of the airport, next to the Northern Crossway – there is outline planning permission for 18,580m2 (200,000 sq ft) of hi-tech, industrial and business space.
At present, some 2,787m2 (30,000 sq ft) has been prelet and presold. Sherry Fitzgerald and Hamilton Osborne King are joint agents.
Prelet to Hella
Hella Ireland has taken a prelet on 1,858m2 (20,000 sq ft) at a rent I£65 per m2 (I£6 per sq ft) on a 25-year lease. Lyle is hoping to presell or prelet the remaining 929m2 (10,000 sq ft). And 929m2 (10,000 sq ft) has been presold to a “multinational company”, with prices quoted at £635 per m2 (I£59 per sq ft).
“The location will be underlined by the Port Access Route opening in 2001,” says Lyle. Planning permission is expected to be granted soon for a further 7,432m2 (80,000 sq ft).
On the Westside, developers Pat Doherty and Gerry Maguire have high hopes for Park West – a planned I£37m business park on a 28.3ha (70 acre) site by the M50/Naas Road interchange. They have submitted one of the largest industrial planning applications ever lodged in Ireland to South Dublin county council for 69,675m2 (750,000 sq ft) of industrial/warehouse accommodation. The site, bounded by the Grand Canal to the south and the Dublin/Cork railway line to the north, is one of the last greenfield sites in the Naas Road region.
The campus-style park will cater for a wide range of occupiers. Joint agents Lambert Smith Hampton and Palmer McCormack are quoting purchase prices between I£538 per m2 and I£592 per m2 (I£50 per sq ft and I£55 per sq ft), while rents are between I£43 per m2 and I£54 per m2 (I£4 per sq ft and I£5 per sq ft).
The developers are entering a joint initiative with the Waterways Service of the Department of Arts, Culture and the Gaeltacht to restore a stretch of the canal, providing walkways, docking and a picnic area. They have also built a I£2m bridge giving direct access to Nagor Road, which links to Naas Road.
A significant force in Dublin’s industrial market is the Industrial Development Authority, drawing overseas companies who plump for leases rather than freeholds on IDA estates. The telemarketing sector is a prime target, along with private developers. Last month, IBM took 3,716m2 (40,000 sq ft) at Ballycoolin in north-west Dublin for its first call centre in Ireland.
Kyle comments: “Companies are enticed to Dublin by the IDA’s grants, a good telecommunications infrastructure and good standards of employees.” These include the 7,432m2 (80,000 sq ft) telemarketing facility which is about to be built at the IDA’s Swords Business Park, North County Dublin.
However, he emphasises a growing lack of distinction between office and industrial space as more and more hi-tech companies arrive. New building types are being developed to serve this “hybrid” market, such as Parkway Properties’ Parkway House on Lower Ballymount Road. There are four units of 873m2 (9,400 sq ft) available at I£91 per m2 (I£8.50 per sq ft) to rent or I£915 per m2 (I£85 per sq ft) to buy, with an office content of 65% and a central warehouse area.
The development is next to Western Parkway Business Park – Parkway Properties’ first industrial scheme of 40 hi-tech units.
The south-west of Dublin is a more traditional industrial area. “One of Dublin’s most exciting new developments is at Citywest, a business park modelled on Stockley,” claims William Tuite of Jones Lang Wootton, joint agent on the scheme with Harrington Bannon. The 121.4ha (300 acre) hi-tech site is owned by Davy Hickey Properties. Rents are I£65 per m2 (I£6 per sq ft).
A 11,148m2 (120,000 sq ft) unit, prelet to Saturn Solutions for I£450,000 pa, will be complete in September.
Snapping up space
At Unit 2004, Jones Lang Wootton reports that two interested parties are snapping up three-quarters of the 2,461m2 (26,492 sq ft). Unit 2005, comprising 2,891m2 (31,120 sq ft) of offices and production space is soon to be completed, and is the only speculative unit available. Rents are quoted at I£61.89 per m2 (I£5.75 per sq ft).
Another new scheme is Rohan Holdings’ Furry Park Industrial Estate, Santry, where 22,296m2 (240,000 sq ft) is either built or earmarked for particular occupiers. Newsagent Easons has bought one 3,716m2 (40,000 sq ft) unit at I£592 per m2 (I£55 per sq ft). Jones Lang Wootton acted for Easons. Another 3,716m2 (40,000 sq ft) unit is being sold to a distribution company, while the remainder will be sold to a property investment company.
Key transactions
Woodford Business Park: Automotive lighting company Hella Ireland has prepurchased 1,858m2 (20,000 sq ft) at I£635 per m2 (I£59 per sq ft). Hamilton Osborne King and Sherry Fitzgerald acted for Woodford Developments.
Citywest Business Campus, Naas Road: Saturn Solutions has taken a prelet on a 11,148m2 (120,000 sq ft) unit at I£59 per m2 (I£5.50 per sq ft) on a 25-year lease. Palmer McCormack acted for Saturn. Jones Lang Wootton and Harrington Bannon acted for Davy Hickey Properties.
Parkway Business Centre: Private developer Jimmy Monaghan has presold a new 1,719m2 (18,500 sq ft) warehouse to Umbro at close to I£1m. Lambert Smith Hampton represented Jimmy Monaghan.
Unit 1, Parkway Business Centre, Ballymount: Unit 1, comprising 2,230m2 (24,000 sq ft), has been let to Debenhams at a rent of I£56 per m2 (I£5.20 per sq ft) on a 20-year lease with five-yearly reviews. Lambert Smith Hampton acted for AIB Investment Managers.
Broomhill Business Park, Tallaght: Irish Printing Resources took 2,276m2 (24,500 sq ft) at I£61.89 per m2 (I£5.75 per sq ft). The Phelan Partnership acted for IPR. Hamilton Osborne King acted for Friends’ Provident.
