Mountpark, Deka And ICG Inject Momentum Back Into Industrial And Logistics Market

Despite its consistently strong performance in recent years, Dublin’s industrial and logistics market slammed on the brakes in the first half of 2024. A higher interest rate environment, increasing rents and economic uncertainty contributed to a pause on new leases, along with the ongoing low availability of prime stock.

But over the past month, the areas close to and connected with Dublin Airport in particular have seen a fresh spate of industrial and logistics takeup as Dublin shows signs of reigniting toward the end of the year.

And despite the slowdown in leasing, the market has attracted the attention of global investors, with a huge investment by Mountpark and international capital investments from Deka Immobilien and ICG pointing to a boost in trading for the best sites in the market.

The leasing market lacks impetus right now. Dublin continued to see solid levels of takeup in the industrial and logistics market throughout 2023, but CBRE pointed to a decline in activity in 2024 in its half-year report, with Dublin takeup totalling just over 340K SF in Q2, 60% below the long-term quarterly average for the market.

That malaise has not fed through to the investment and development market. CBRE predicted several prime deals would progress in the second half and €600M of deals would be completed across all asset classes in Q3, the highest level since Q1 2023.

Pharma specialist Uniphar in Q3 exercised its option to purchase its headquarters at 4045 Citywest Business Park from Iput, and the building is subsequently being offered via BNP Paribas Real Estate on a sale-leaseback at a guide price of €45M. Built in 2007, Uniphar’s headquarters is a 230K SF warehouse on 8.6 acres.  

Meanwhile, there are encouraging signs that the Irish industrial and logistics market is becoming attractive to overseas investors again. German fund manager Deka Immobilien has made its Irish logistics debut after it exchanged contracts to purchase PrimeLine’s new distribution headquarters in Ashbourne Business Park, County Meath. 

Constructed at the beginning of the year, the two properties comprise a total area of around 360K SF, and although the purchase price was not disclosed, it is understood to have been circa €70M in what represents one of the biggest single-tenant logistics investment deals completed in recent years. As part of the sale-leaseback, PrimeLine has agreed to a 20-year lease on the industrial space, with the purchase price reflecting a net initial yield of just above 5.5%. 

“Investment opportunities of scale in the sector are relatively infrequent in Ireland, hence this attracted the interest of tier-1 investors,” CBRE Ireland Director and Head of Research Colin Richardson said. “There is a notable uptick in transactional activity in the Irish investment market, driven partly by the downward trajectory of interest rates and thus the wider spread between CRE yields and the cost of debt.” 

There are several large-scale transactions in process, and should they close in the next three months, they will push full-year investment volumes past the 2023 level, Richardson added.

But arguably the most positive sign of that renewed confidence is at the €325M first phase of Grange Castle West, Mountpark’s second major logistics campus in the Irish market, located 2 kilometres away from its existing Baldonnell project. Construction has started, and Mountpark has planning permission for the first phase, which comprises five buildings totalling circa 626K SF and ranging from 70K SF to 190K SF.

The 78-acre development will bring Mountpark’s overall investment in the Irish logistics sector to €600M in the past six years, and the scheme will eventually grow to more than 1.2M SF of logistics space with links to the N7 Naas Road and the N4.

Mountpark said three of the five units will be delivered on an inventory basis — including the 115K SF Unit 1, 198K SF Unit 2 and 97K SF Unit 4, which should be available from the second quarter of 2025 — with two other units reserved for customers.

Echoing the sustainability strategy at Baldonnell — which is host to Amazon, DB Schenker, DSV, Home Store + More, United Drug and Kellihers Electrical — the buildings will be targeted to achieve BREEAM Outstanding and building energy A1 ratings, with the potential for an additional, larger facility of up to 500K SF.

Amazon's facility at Baldonnell was acquired late last year by Spanish billionaire and Zara founder Amancio Ortega's investment firm, Pontegadea, for €225M in his company's first Irish logistics deal.

“This project reflects our ongoing confidence in the region, and we are excited to continue building, investing and delivering on key infrastructure in Ireland,” Mountpark UK and Ireland Development Director Brett Huxley said in announcing the start of construction.

UK and European developer Chancerygate and specialist sustainable and impact investor Bridges Fund Management also won planning permission for a €40M development near the airport in July.

Meanwhile, London-based ICG Real Estate’s Metropolitan platform has completed the purchase of Unit F on Kilcarbery Business Park in Dublin’s Clondalkin suburb for circa €27.5M, representing a net initial yield of 7%. The deal is ICG’s first acquisition in Ireland, with the country now understood to be one of the key targets for its European logistics investment programme.  

The 210K SF unit is let to several transportation operators and is between the data centre hubs of Profile Park and Grange Castle Business Park, close to Mountpark’s development.

Despite the subdued leasing figures, some of the biggest tenants in the logsitics market globally are expanding in Ireland. One company scheduled to add more logistics space in 2025, global carrier FedEx Express Europe, is building a new logistics facility close to Dublin Airport as it looks to expand its capacity.

The new facility will have warehousing of circa 157K SF, with 30 loading bays for trucks and 137 loading bays for vans. It will be located at the Horizon Business Park to the south of the airport and will also serve as the firm’s Irish headquarters. The site is due to become operational early next year.

All eyes will now be on the final quarter of the year and whether new investors will spark more international capital flows into Dublin's industrial and logistics sector.

“Industrial and logistics continues to attract favourable terms,” Richardson said, describing prime properties as a stable sector in Q3, with investment yields at 5%, up 25 bps during the quarter.

“The financing cost backdrop has notably improved over the last three months,” he said.