- What Savills Ireland has warned of a shortage in logistics space
- Why COVID-19 construction delays have hit delivery of sites
- What next Three-fifths of new space to be completed by end of 2020
Savills Ireland has warned of a supply shortage of logistics space with coronavirus-related construction delays hitting delivery of new space across the country.
The group’s research shows there is 475,000 sq ft of grade A warehousing space planned for completion in 2020, just over 60% of which is already pre-let.
However, with a delay to some sites due to social distancing measures and site shutdowns caused by the COVID-19 pandemic, only 60% of this space – or 290,000 sq ft – is to be completed by the end of the year.
Delays are also expected to impact delivery in 2021, with supply to be cut by a third. Before the pandemic, Savills estimated 1.17m sq ft was to be delivered next year, but due to ongoing delays, this has been cut by 33% to 800,000 sq ft.
While supply has been cut, the Irish logistics market has been buoyed by several lettings successes; React News revealed last week Amazon was to take 200,000 sq ft across two Dublin sites, making its debut in the country, while React also revealed Dublin’s largest logistics deal for a decade, with Dunnes Stores signing a 20-year lease with IPUT for a 325,000 sq ft distribution hub (pictured above).
Peter Levins of Savills Industrial and Logistics division said: “There are a number of developers who recently secured planning permission and were gearing up to start construction immediately. These projects will now be delayed until 2021, and some may slip into 2022 due to the time it takes to fully develop a new warehousing or logistics building.
“Prior to the Covid-19 crisis, we had identified a lack of supply of good quality modern stock and this factor will most likely now be exacerbated. There are a number of large space requirements in the market from large logistics companies who continue to look towards their longer-term objectives – to operate from more efficient and sustainable warehousing space. We have identified over 1.3m sq ft of demand for new warehouse and logistics space in our market and this needs to be serviced by developers capable of delivering new quality stock.
Gavin Butler of Savills Industrial and Logistics division, added: “It is very difficult for anyone to make a judgement on the medium to long term effects of Covid-19 as the situation is so fluid at present. However, we have definitely experienced an increase in demand for warehouse space in recent weeks, albeit, with a significant proportion of this demand centred on requirements for short term space. We believe that our clients who are flexible and able to adapt quickly will have success in securing tenants and rent roll in the short term.”
