The Dublin industrial and logistics property market experienced a significant decline in take-up during 2024. Year-end projections indicate that take-up will be less than half of the three million sq ft recorded in 2023. Developers responded to increasing funding and construction costs, alongside softer investment yields, by curtailing their construction programmes. Consequently, building completions dropped from two million sq ft in 2023, to approximately one million sq ft in 2024, leaving demand unmet. Second-hand market availability remained constrained, with vacancy rates still hovering close to a historic low of 2 per cent.
Despite steady levels of inquiries throughout the year, these did not translate into proportional take-up. Challenges included insufficient supply and delays in securing approvals from parent companies of Irish subsidiaries due to global economic uncertainties and geopolitical concerns. Nonetheless, the past three months saw a rise in activity, with nearly one million sq ft of occupier transactions agreed or in advanced negotiation stages, setting the stage for a rebound in 2025. This outlook may shift due to proposals for trade tariffs by the incoming Trump administration.
The standout transaction of the year was Sports Direct’s pre-purchase of a 26,940sq m (290,000sq ft) warehouse at Dublin Airport Logistics Park from Rohan Holdings, scheduled for completion in early to mid 2026. The largest deal of standing stock was the letting by Palm Capital to JYSK, of a refurbished 9,011sq m (97,000sq ft) unit at M50 Logistics Hub. For both Sports Direct and JYSK, it was their first time acquiring warehousing in the Irish market, where they expect to substantially grow both their retail footprint and online retail businesses.
Already the largest holder of logistics assets in Dublin, IPUT Real Estate Dublin recently obtained planning permission to develop 2.5 million sq ft of logistics space at Nexus Logistics Park, placing it at the centre of a healthy warehouse supply pipeline in north Dublin. Conversely, the relative lack of appropriately zoned development land in south Dublin will continue to limit supply in this location going forward.
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Prime, new-build rents remained stable at €13 per sq ft in 2024 but are expected to increase to €13.50-€13.75 per sq ft in 2025. Certain refurbished buildings in prime locations have achieved in excess of €17 per sq ft. These typically involved buildings of less than 1,860sq m (20,000sq ft), where the lease incorporated an early break option.
Although construction costs have stabilised after years of rapid escalation, new fire regulations effective from May 2025 are likely to add significant costs, which will inevitably be passed on to occupiers in the form of higher rents and prices.
The industrial and logistics sector continues to attract global and local investors, drawn by its strong fundamentals. While large-scale investment opportunities were scarce in 2024, the year’s major transactions involved new entrants to the Irish industrial investment market. German fund Deka Immobilien acquired 33,445sq m (360,000sq ft) of warehousing in Ashbourne Business Park in a €70 million sale-and-leaseback deal with Primeline Logistics. Separately, Urbeo and ICG Real Estate acquired the 19,974sq m (215,000sq ft) former Britvic distribution facility in Kilcarbery Business Park for €27 million. Meanwhile, private equity investors continued their focus on value-add opportunities, while private individuals were predominant in the smaller lot sizes.
Prime industrial investment yields stayed stable at 5 per cent throughout 2024, with little change expected in the short term. The outlook remains optimistic for 2025, as the market continues to evolve to meet demand.
Kevin McHugh is a director of Harvey
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