Coronavirus slams brakes on new warehouse space in Ireland
Coronavirus will put the brakes on the delivery of much-needed warehouse space in Ireland, creating supply shortages for logistics companies, according to Savills Ireland.
The agent said 475,000 sq ft of warehousing space was earmarked for a 2020 completion, but due to disruption caused by coronavirus, only 290,000 sq ft will be delivered by the end of the year.
This space has been in demand, with more than 60% already reserved or prelet.
Coronavirus will put the brakes on the delivery of much-needed warehouse space in Ireland, creating supply shortages for logistics companies, according to Savills Ireland.
The agent said 475,000 sq ft of warehousing space was earmarked for a 2020 completion, but due to disruption caused by coronavirus, only 290,000 sq ft will be delivered by the end of the year.
This space has been in demand, with more than 60% already reserved or prelet.
The effects of Covid-19 will snowball into 2021, Savills said. Almost 1.2m sq ft of new space was expected to be delivered in 2021, but only 800,000 sq ft will be delivered next year, it predicted.
This will be bad news for logistics companies, according to Savills, which has identified more than 1.3m sq ft of requirements in the market for new warehouse and logistics space.
Peter Levins of Savills’ industrial and logistics division said: “There are a number of developers that 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.
“The constraints arising from Covid-19 will immediately impact on the working practices on construction sites, where social distancing will need to be implemented and managed, and this will invariably add to construction costs and programmes.
“These increases may be offset by instances of suppliers competitively tendering for new work, keen to get new work streams progressed and more competitive pricing for some construction materials. Therefore, we feel that construction costs are unlikely to see any tangible decreases in the short term.
“Because of the reduction in the amount of speculative development coming on stream in 2020, the increase in online spending due to Covid-19 and the demand for 1.3m sq ft of logistics space, rents are likely to remain at current levels in the short term, with the potential for further growth once the severity of the crisis passes.”
To send feedback, e-mail lucy.alderson@egi.co.uk or tweet @LucyAJourno or @estatesgazette
