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Prime Industrial Rents Expected to Grow 13.9 Percent in 2017

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Prime Industrial Rents Expected to Grow 13.9 Percent in 2017

Prime Industrial Rents Expected to Grow 13.9 Percent in 2017
January 18
10:34 2017

Prime rents in the industrial sector may rise by almost 14% in 2017, following an increase of 25% last year, according to commercial property specialists CBRE’s Outlook 2017 annual report, released on Tuesday.

The report found that industrial take-up of almost 290,000 square meters was achieved in Dublin in 2016 in 183 individual transactions – a third less than the record volume of take-up achieved in this sector in 2015, due to a shortage of modern accommodation to satisfy demand.

CBRE Ireland Managing Director Enda Luddy said: ” The only sector where take-up was down year-on-year in 2016 was the industrial sector of the market although this was purely as a result of a lack of supply of modern accommodation in the absence of speculative development, with demand remaining robust from a range of distribution and logistics operators in particular. We also saw a notable increase in demand from data centre providers over the course of the last year.”

The report predicted a notable increase in speculative development activity in 2017 as viability of development improves and that there will be a considerable appetite from distribution and logistics operators and data centres in particular.

In 2016, the report recorded 223 investment transactions of greater than €1 million were completed in the Irish market, totalling more than €4.5 billion between them. Investment spend was skewed upward by a number of trophy transactions including the sale of both Blanchardstown Town Centre and Liffey Valley shopping centres in West Dublin. 50% of investment spend last year comprised retail investments.

CBRE said they expect to see continued appetite for Irish real estate from core buyers throughout 2017 with the biggest challenge being a scarcity of prime product to satisfy the volume of bidders. Against this backdrop, CBRE expect that forward funding of new development will become more prevalent in the market this year. Total returns, rental growth and investment spend volumes are all expected to be lower in 2017 than last year.

The full report can be read here.

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