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Industrial and Logistics sector proves itself as one of the most desirable asset classes

Kate English • 09/07/2021

Latest research from Cushman & Wakefield reveals investment activity improves, despite the ongoing pandemic and travel restrictions. Turnover levels reached approximately €641.5m across 37 deals in the second quarter of 2021.

A further €805m was recorded in the quarter in the form of forward commit style arrangements, majority of which were PRS assets, with one hotel forward fund and of significance an industrial forward fund. This brings total capital spend in the Irish commercial property market to just shy of €2.3bn in the first half of 2021.

Commenting on the market, Kate English, Chief Economist, Head of Ireland Research & Insights noted; “The Irish investment market is beginning to see a turning point, as the second quarter saw improved levels of activity. Following a prolonged lockdown at the beginning of the year, availability on the market is tight, however we should see this improve with product launching as we move through the second half of the year”.

The industrial and logistics sector was the standout performer of the quarter, recording €274m worth of investment assets trading, with an additional €50m in the form of a forward fund deal, bringing total capital flows in the quarter to €324m. The quarter two results alone surpass both 2019 and 2020’s annual industrial turnover.

Arguably, one of the most resilient sectors to the COVID-19 pandemic, the shortage of good quality stock coupled with strong occupational demand has created total capital inflow of €411m in just six months of activity.

Supporting this, Clive Roche, Divisional Director, Capital Markets Ireland, Cushman & Wakefield noted; “Similar to the rest Europe we are seeing unprecedented investor demand within the Industrial and Logistics sector. With strong market fundamentals and a limited investment supply relative to demand, we are witnessing intense competitive bidding situations which is driving ongoing yield compression across the sector”

Investment in residential assets with an income attached, totaled approximately €25.1m across two deals. An additional €685m worth of forward commitment transactions also took place in the second quarter, meaning total capital flows into the residential sector surpassed €1bn by the half point of the year.

Although take up activity remains below average in the office market, approximately €311m traded in office assets, bringing total activity in the first six months of the year to €702m. This H1 level represents an increase of 18% from the €595m recorded over the similar period in 2020.

The largest revenue generating transaction of the second quarter was the sale by Irish Life Investment Managers of block A Riverside IV, 70 Sir John Rogerson’s Quay, at €164m to German fund Deka Immobilien.

Outside of the Dublin market, the largest regional investment in the quarter was sale of One Navigation Square, Albert Quay, Cork. Located in the city’s docklands, French investor Corum Asset Management acquired the office asset for €60m.

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