“Galway’s industrial market performed exceptionally well during 2015," said Sean Coyne of DTZ Sherry FitzGerald in his review of Galway’s industrial market. "The recovery strengthened significantly with increased occupational demand reflected in take up, which rose to its highest level in over a decade.
"Following a strong start to the year, transaction activity was above trend in both the second and third quarters of the year. However activity fell during the final quarter. Despite transaction volumes dipping, overall occupier sentiment remains robust.
"Transaction activity in 2015 as a whole totalled an impressive 25,000sq m, considerably higher than the comparison period in 2014 and over double the long-run annual average of 12,050sq m. Take up during 2015 was heavily skewed by one significant deal, namely the occupation by Zimmer Orthopaedics Manufacturing Ltd of approximately 10,850sq m at the former APW building at the Oranmore Business Park. Stripping out this deal, activity was broadly in line with 2014 levels.
"In 2015, both the total volume of transaction activity and the number of individual deals increased. In particular, a notable feature of the market during the year was the improvement in activity in medium sized units [1,000 – 5,000sq m]. Take up in this category increased significantly on the comparable period in the previous year. The average sized deal stood at 1,900sq m, up 17 per cent on the comparable level in 2014.
"An analysis of all occupied space in 2015 reveals that demand was strongest for Grade A industrial space, accounting for 65 per cent of transactions. Grade B accounted for a further 17 per cent, while Grade C space absorbed approximately 18 per cent of take up.
"The vacancy rate stood at 8.8 per cent during the final quarter of 2015, marginally lower than the comparable rate of 9.3 per cent recorded in 2014. The northeast region, which accounts for the majority of vacant accommodation, 92 per cent, has a vacancy rate of 9.5 per cent; that said, demand is strongest in the northeast. The southwest and northwest combined account for eight per cent of availability.
"An analysis of available accommodation by grade reveals that there are only two Grade A industrial units available in the Galway market. Furthermore, there is no available unit greater than 10,000sq m, thus highlighting the limited supply of good quality large floor plates. The majority of accommodation comprises Grade C stock, 53 per cent, much of which is older stock and typically smaller sized units. Grade B space accounts for the remaining 30 per cent of available accommodation.
"Prime headline rents for industrial space rose during the final quarter of 2015 to stand at €54 per sq m, fuelled by depleting supply levels. A comparison with the corresponding period in 2014 reveals rental growth of 20 per cent."