Savills Ireland released a report revealing the logistics market take-up totalled 2.9 million sq. ft. in 2022, nearly one-fifth higher than total take-up in 2021.
The average deal size of 40,350 sq ft in 2022 was the largest on record. This record transaction size was among 18 deals for large-scale units greater than 50,000 sq ft in. These deals accounted for more than half of total take-up in 2022.
The logistics sector accounted for the majority of take-up in 2022, primarily driven by third-party logistics firms who provide outsourced logistics services for both consumers and vendors, and first-party logistics firms who manage the shipping, transportation, and retail of their goods. Meanwhile, the vacancy rate increased from 1.4% in Q3 to 1.6% in Q4, driven by the number of vacant legacy units, constructed before 2000, with only one out of the 39 vacant units in Q4 built in the last decade.
The largest deal of the year was the pre-letting of 206,000 sq ft at Unit 1, Quantum Distribution Park, to DHL. Meanwhile, e-commerce giant Amazon pre-let 200,000 sq ft at Unit 902, Northwest Logistics Park, in what was the second-largest deal of 2022. The global logistics firm Maersk pre-let 178,140 sq ft at Unit 3 Quantum Distribution Park, as well as an additional pre-let of 73,780 sq ft in Unit 3, Quantum Distribution Park, as well as an additional pre-let of 73,780 sq ft in Unit 4, Quantum Distribution Park. In the fourth-largest deal, US-headquartered information storage firm Iron Mountain signed for 161,700 sq ft at the recently completed Unit Q, Aerodrome Business Park. While a significant number of logistics firms completed some of the biggest deals of the year, we believe that retail-oriented logistics firms will be the sub-sector with the largest number of deals and space taken in 2023.
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Occupiers are seeking large, modern, ready-for-use stock to continue developing their presence in the Irish market and to further develop decentralised oversight and control of their relevant supply chain functions. The preference for these assets is also driven by the greater macroeconomic context, whereby Ireland, according to the IMF, is forecast to have GDP growth of 4% in 2023. The upward trend in prime rents reflects this positive sentiment, after they increased from €11.25 psf in Q4 2021 to €12.00 psf in Q4 2022.
Jarlath Lynn, Director of Industrial and Logistics at Savills Ireland, commented: "The activity in the Dublin industrial and logistics market was robust in 2022. Firms sought additional space to further capitalise on the continued growth of the Irish economy in coming years. While supply-chain bottlenecks, weakened consumer sentiment and high levels of inflation posed numerous challenges, the resiliency of the sector was demonstrated in 2022. The market continued to exhibit strong demand this past year, with 2.9 million sq ft of stock let. With the current demand-supply imbalance unlikely to be completely addressed in 2023, we foresee a continued increase in the number of pre-lettings and a low vacancy rate.
"With most supply chain bottlenecks easing, consumer sentiment showing signs of potential recovery, and inflation levels appearing to moderate, the sector may experience a very strong period of expansion and growth, with the Irish economic environment continuing to support the sector."
