New research from property advisor Savills Ireland shows that demand in Dublin's industrial and logistics sector was up in the final quarter of 2020.
Savills noted demand for 87,318 metre squared of industrial and logistics space during the fourth quarter, up 5% on that same period the previous year.
There were 47 transactions in total, 68% of which were lettings totalling 67,690 metre squared.
It said this brings total take up for 2020 to 276,536 metre squared, which is down 7% compared with 2019 but 5.5% above the 10-year average.
According to Gavin Butler, Director of Industrial and Logistics in Savills, take up in 2020 has been hampered by an all-time low vacancy rate of just 1.8%.
With no supply of speculatively built stock anticipated to come on stream until the second quarter of 2021 and over 35% of the current vacant stock over 30 years old, Savills said occupiers are extremely limited in terms of potential options.
Just one new build was delivered to the market in the final quarter of last year - Unit 635 Northwest Logistics Park, Dublin 15, totalling about 9,286 metre squared which was built by Park Developments Group and pre-let on a new long-term lease.
The research shows that 91% of all new builds finished since 2016 have been let prior to completion.
Savills said this reflects the lack of supply of "good quality" second hand space coming to the market.
In total, only 26,500 metre squared of new space was delivered to the market in 2020, all of which has been let.
The research shows that prime rents for new space are in the region of €112.50 per metre squared, however a rent of €129 per metre squared was achieved for the letting of a new build in southwest Dublin in the fourth quarter, setting a new benchmark.
Savills said this rental level, coupled with existing strong levels of demand and the historically low vacancy rate, is likely to drive rental growth further in 2021.
In the context of a pandemic, Savills states that this rental inflation illustrates the strength and resilience of industrial and logistics property sector.
It said there are nine buildings which total 93,570 metre squared currently under construction and due for completion in 2021 across six developments in Dublin, three of which are already committed.
Based on current levels of demand and the tailwind expected for further demand for logistics space arising from Brexit, Savills said it is anticipated that the majority of this space will be taken up prior to completion.