Take-up across the Dublin industrial and logistics market reached 745,000 sq ft in Q4 to bring the total for 2024 to 1.3m sq ft. This, according to a new report from property advisor, Savills Ireland, is the lowest take-up since the series began in 2014 and represents a 58% decline compared to 2023.
There were just 31 deals across the year, resulting in an average deal size of 42,700 sq ft. However, this is distorted by a single transaction of 290,000 sq ft.
The fall in take-up was driven by a decline in the transactions of big-box units sized 50,000 sq ft or more. The number of big-box deals declined by 71% in 2024, representing a decrease of 1.5m sq ft in comparison to 2023.
The largest deal of the year occurred in Q4 with the pre-construction purchase of 290,000 sq ft at Drake House in Dublin AirPort Logistics Park. This was followed by the letting of 103,800 sq ft at Belgard House to Chemist Warehouse and the 96,500 sq ft letting of Building 1 in the M50 Logistics Hub to Jysk.
On a sectoral basis, 2024 diverged from recent trends. For the last three years, third-party logistics (3PL) has driven take-up. However, an 88% decline in sq ft taken by 3PL providers in comparison to 2023 resulted in 3PLs falling behind first party logistics (1PL) and industrial occupiers for total take-up.
The 1PL sector accounted for 44% of sq ft taken across 2024, including the three largest deals outlined above. Notable transactions in the 3PL sector include the letting of 72,300 sq ft at Uniphar House to Caulfield Transport in Q2 and the letting of 53,500 sq ft at Kore Development Park in Q4 to An Post. Industrial occupiers accounted for 31% of sq ft taken in 2024, including the letting of 52,300 sq ft at Unit 1-3, Site 39 in Park West Industrial Estate to the American firm, Silent Aire.
The vacancy rate stood at 1.8% at the end of the year, up slightly from 1.7% at the end of 2023. This was driven by existing stock becoming vacant rather than new supply. However, 235,000 sq ft of vacant space was made available through sublet or assignment.
This includes the largest addition to vacant stock of 178,000 sq ft at Unit 3 Quantum Distribution Park. 83% of vacant units are legacy stock constructed in the 90s or earlier. Notably, the average size of legacy vacant stock is just 21,000 sq ft. Comparably, the average size of modern vacant units is 84,000 sq ft. The lack of transactions in prime industrial and logistics units has resulted in stagnation in prime rents which remained unchanged over the course of 2024 at €13.00 per sq ft. With 1.7m sq ft scheduled to complete this year, prime rents are expected to rise during the course of 2025.
Jarlath Lynn, Director of Industrial and Logistics, commented:
“Our prime rents which are based on best-in-class new build industrial and logistics facilities are expected to rise to €14.00 per sq ft in 2025 as transaction volumes increase with new supply. This is supported by current reserved stock and general higher quoting rental guides, illustrating a positive rental growth trajectory.”
This upward movement in rents will be driven by high demand for best-in-class facilities, including ESG requirements. The expansion of the EU Corporate Sustainability Reporting Directive is helping to drive occupiers, and their suppliers, towards best-in-class stock. The current undersupply of high-quality units, combined with strong occupier demand, will continue to push prime rents upwards.