Res­i­den­tial de­vel­op­ers join the race for in­dus­trial prop­er­ties

Irish Independent - Business Week - - APPOINTMENTS - Donal Buck­ley

Res­i­den­tial and other de­vel­op­ers look set to com­pete with their in­dus­trial coun­ter­parts for in­dus­trial prop­er­ties com­ing to the Dublin mar­ket.

As Cathal Daughton of Lis­ney points out “much of the Z6 (em­ploy­ment uses) zoned lands in Dublin City Coun­cil is un­der pres­sure to be re­de­vel­oped for res­i­den­tial pur­poses and we will see higher prices for this in­dus­trial land in western sub­urbs, such as the Naas Road and Long­mile Road, and north­ern sub­urbs, like Bal­doyle and Fin­glas/Glas­nevin”.

Philip Har­vey of William Har­vey con­curs say­ing that re­cently a UK-listed prop­erty de­vel­op­ment and in­vest­ment com­pany has writ­ten to own­ers within Dublin In­dus­trial Es­tate in Glas­nevin.

“Its ap­proach has been to ex­press an in­ter­est in di­ver­si­fi­ca­tion into in­dus­trial prop­erty and cites the es­tate as an at­trac­tive lo­ca­tion for in­vest­ment. Own­ers would be well ad­vised to take in­de­pen­dent spe­cial­ist in­dus­trial prop­erty ad­vice, par­tic­u­larly bear­ing in mind deal struc­tur­ing and their fu­ture busi­ness premises re­quire­ments,” he says.

A par­tic­u­lar test of this de­vel­oper de­mand will be a 6.8-acre site on the Green­hills Road in Walkin­stown, for which joint agents Sav­ills and Agar Com­mer­cial are seek­ing of­fers in ex­cess of €3m. The site, which con­tains a num­ber of old ware­house build­ings, is sur­rounded by other old in­dus­trial es­tates and like the site, they too are zoned ‘Re­gen’ which would fa­cil­i­tate en­ter­prise and/or res­i­den­tial-led re­gen­er­a­tion in­clud­ing of­fices and a ho­tel. Stephen Mellon of Sav­ills says it has al­ready at­tracted in­ter­est from res­i­den­tial de­vel­op­ers.

Marie Hunt of CBRE points out that if the Gov­ern­ment fol­lows through on its sug­ges­tions that some other in­dus­trial es­tates may be re­zoned for higher value uses such as res­i­den­tial, this will ex­ac­er­bate sup­ply pres­sures in the in­dus­trial and lo­gis­tics sec­tor.

She says de­mand for lo­gis­tics and in­dus­trial ac­com­mo­da­tion pre­dom­i­nantly em­anates from lo­gis­tics providers and says there are sev­eral ac­tive re­quire­ments from par­cel de­liv­ery com­pa­nies.

The strength of de­mand is re­flected in take-up of ac­com­mo­da­tion, ris­ing rents and hard­en­ing yields.

Gavin But­ler of Sav­ills es­ti­mates take-up at just over 97,000 sq m (1 mil­lion sq ft) in Q3 2018, which was dou­ble that for the same pe­riod last year. This brings to­tal let­tings in the first nine months of the year to around 220,000 sq m (2.368 mil­lion sq ft). About one third of that was in sales with the re­main­der in let­tings.

Marie Hunt puts the nine month fig­ures at 210,245 sq m (2.263 mil­lion sq ft ) which is 24pc higher than the cor­re­spond­ing pe­riod of 2017. “There were 39 in­di­vid­ual in­dus­trial trans­ac­tions signed in Dublin in Q3 2018 in­clud­ing some pre-let­tings,” she adds.

Gavin But­ler says the in­crease was “on the back of sus­tained im­prove­ments in the labour mar­ket and the strong con­sumer econ­omy which con­tin­ues to drive the cir­cu­la­tion of goods through­out the coun­try. As more goods are be­ing trans­ported through­out Ire­land, we ex­pect de­mand to re­main strong for lo­gis­tics space.”

Oc­cu­piers in­clude food com­pa­nies, lo­gis­tics providers, couri­ers and par­cel de­liv­ery com­pa­nies.

In Au­gust, Cush­man & Wake­field fore­cast that prime Dublin in­dus­trial rents would in­crease by 10pc to around €100 per sq m in the se­cond half of the year and that yields could drop a fur­ther 25 ba­sis points to 5pc. A sim­i­lar trend could be seen in Gal­way with rents ris­ing by al­most 7pc to €80 per sq m. Lim­er­ick rents are ex­pected to hold steady at only €59 per sq m. Yields in the pro­vin­cial cities are also fore­cast to tighten.

How­ever Marie Hunt says that prime Dublin rents are al­ready achiev­ing €106 per sq m and are tend­ing stronger.

The largest deal this year, as re­ported in the Ir­ish In­de­pen­dent, saw Black­Rock Real As­sets and Ir­ish de­vel­oper Michael O’Flynn ac­quire the for­mer Hewlett Packard 195-acre cam­pus in Leixlip, Co Kil­dare for a fig­ure un­der­stood to be in the re­gion of €51m in a deal which was bro­kered by CBRE.

The cam­pus in­cludes nine build­ings with a to­tal floor area of 1.47 mil­lion sq ft. Cur­rent oc­cu­piers in­clude Hewlett Packard En­ter­prise, Ce­lestica, MGS and Global Entserv So­lu­tions. Some 600,000 sq ft of the built stock is va­cant while 70 acres is primed for de­vel­op­ment. The new own­ers are plan­ning to in­vest and re­brand it as Lif­fey Busi­ness Park.

An­other in­dus­trial sale saw Friends First buy 15 Magna Busi­ness Park, Ci­tywest, a 3,118 sq m (33,562 sq ft) build­ing on 2.25 acres, for in ex­cess of €3.8m.

In Dublin 15 a 26,361 sq ft prop­erty, 802 North­west Busi­ness Park, Bal­ly­coolin, was sold to pri­vate in­vestors. William Har­vey had been ask­ing €1.95m.

Nearby 40 Rose­mount Busi­ness Park, a 18,331 sq ft prop­erty, was sold to a prop­erty in­vest­ment com­pany which had a tenant lined up. William Har­vey had been ask­ing €1.5m.

A 17,050 sq ft build­ing at 5/6 Jamestown Busi­ness Park, Fin­glas, was sold to an owner oc­cu­pier for €960,000.

Philip Har­vey says that his firm is cur­rently in­volved in a num­ber of off-mar­ket

De­vel­oper de­mand:

The 6.8-acre site on the Green­hills Road in Walkin­stown is zoned ‘Re­gen’ which would fa­cil­i­tate en­ter­prise and/ or res­i­den­tialled re­gen­er­a­tion in­clud­ing of­fices and a ho­tel. Joint agents Sav­ills and Agar Com­mer­cial are seek­ing of­fers in ex­cess of €3m in­vest­ment sales with lot sizes in ex­cess of €5m.

The largest let­ting deal in Dublin this year saw the 12,494 sq m (134,484 sq ft), Unit 103 North­west Busi­ness Park, Bal­ly­coolin let to Sonas Bath­rooms at an an­nual rent of €1.1m. Own­ers, Iput had un­der­taken a re­fur­bish­ment pro­gramme and it is now gen­er­at­ing an in­come yield on cost of 7.3pc. William Har­vey and Sav­ills were joint agents.

Siemens Health­care Di­ag­nos­tics Man­u­fac­tur­ing took a lease on the 27,760 sq ft, 7 Swords Busi­ness Park on a 2.57 acre site at a head­line an­nual rent of €220,000.

Both Ro­han Hold­ings and Green Reit are un­der­tak­ing new de­vel­op­ments.

Ro­han is due to com­plete con­struc­tion of three large fa­cil­i­ties. Th­ese in­clude Units A7A and A7B in North City Busi­ness Park and Heron House in Dublin Air­port Lo­gis­tics Park. Sav­ills are guid­ing an­nual rents of €199,700 and €200,100 re­spec­tively for the two semi-de­tached fa­cil­i­ties of 1,850 sq m (19,913 sq ft).

Green Reit com­pleted three fur­ther units at Hori­zon Lo­gis­tics Park, in­clud­ing an 80,000 sq ft unit for Kuehne + Nagel. Green also be­gan con­struct­ing Units D6 and D7 at Hori­zon and it also re­ceived plan­ning per­mis­sion for Unit D9 ex­tend­ing to 110,000 sq ft, which has been pre-let to Bunzl Plc. The Reit also ac­quired a fur­ther 28 acres of land at Hori­zon bring­ing its to­tal land hold­ing to about 300 acres.

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