Commercial property space at 20-year low as market ramps up activity to meet demand
Commercial property space is at a 20-year low as there are fewer areas available to buy or lease than any point since 2002, a new report reveals.
As a direct result of this pent-up-demand, there is more industrial and logistics space under construction now than at any time since 2002, showed the report by Cushman & Wakefield.
“Almost 61% of space under construction is already pre-let or pre-sold to an occupier, with pre-lets proving much more popular. Further units have terms agreed and we expect to see more transactions as units get closer to completion,” said Kate English, Cushman & Wakefield’s chief economist.
The latest report on the industrial and logistics market by the commercial real estate company showed that Dublin is at the centre of this surge in construction activity.
There was 61,000 square metres of new space sold or leased by an occupier in the second quarter of this year alone, said the report.
Cushman & Wakefield predicted that 74,085 square metres of new industrial and logistics space will be completed and added to the Dublin market by the start of Q3.
Nearly 90% of this was let to an occupier before or upon completion, showing the high demand in the market. Some examples of these include DB Schenker, the Office of Public Works and LifeStyle Sports.
The amount of space added to the market this year surpasses the total completed in 2021 and is one of the highest volumes since 2008.
Development activity is expected to continue in this market during the second half of the year. A total of 228,200 square meters was under construction as of the end of June, with expected completion dates ranging from 2022 to 2023.
Dublin prime rents are at €115 per square metre as of the end of Q2 2022, with further rental growth expected over the remainder of the year, the report said.
“While construction inflation is pushing up the cost of new builds and subsequently rents, this is being absorbed by the market with further rental growth expected in the coming months,” said Brendan Smyth, head of industrial and logistics at Cushman & Wakefield.