News Article

1/23/2008 - IRISH INDEPENDENT ARTICLE - KEVIN MCHUGH
The steady performance of the Industrial Property Market during 2007 is likely to continue during 2008, but at a more moderate and considered pace. Given the number of quality, active enquiries as yet unsatisfied, demand for medium and large industrial facilities should continue as companies plan their medium and long term space requirements. In the smaller size category of 1-500 sq.m., the growth in prices experienced in recent years is unlikely to be repeated.

During the second half of 2007, the international credit crisis saw banks significantly tighten their terms of business and this coupled with higher interest rates restricted the ability of many to purchase. This led to an increase in letting activity and this trend is likely to continue into 2008 with possible marginal upward pressure on rents. Current rents in prime locations are approximately €129 per sq.m. per annum.

Nevertheless, the preference of the majority of indigenous company directors is to own rather than to lease and established, successful companies are being well received by banks who are anxious to do business with them, albeit at lower ‘loan to value’ ratios. In 2008, there is likely to be limited speculative development of medium / large facilities and developers will competitively pursue ‘design and build’ contracts. Continued demand from purchasers is envisaged for second-hand stock within established estates inside the M50 motorway. Current quoting prices for new buildings in selected locations are €2,260 per sq.m.

The occupier preference is for modern, secure, high bay warehouse/distribution facilities in purpose built parks, the majority of which are immediately outside the M50 motorway. The superior cubic capacity and loading access coupled with good accessibility to the National roads network is increasing business efficiencies for these companies. Surprisingly, the level of choice for occupiers seeking to locate in South West Dublin is beginning to dry up with only a handful of sites and newly constructed buildings remaining in the Greenogue and Aerodrome Business Parks. The only new large scale development planned for this area at present is Profile Park at Grange Castle. Pressure is likely to mount on the Planners to re-zone lands along the Naas Road / N7 corridor in order to ensure a sufficient supply to meet ongoing and future demand. On the North West side of Dublin, there is a good supply of zoned land sufficient to satisfy ongoing demand.

Provided that economic conditions remain stable and developers continue their prudent approach to the production of new space, we would envisage a steady performance through 2008.