Garrett McClean, Executive Director and Head of Industrial & Logistics at property consultants CBRE, has launched the tenth annual edition of the CBRE Kingspan Ireland Logistics Confidence Index prepared by Research Agency Analytiqa and supported by Freight Trade Association Ireland. The survey seeks to assess confidence and expectations in the Irish Logistics and Supply Chain sector.
Mr. McClean said that the report focusses on the most important trends and issues facing logistics and supply chain operations, including skills shortages, property requirements, managing e-commerce growth and sustainability. As geo-political and economic uncertainty continues to shape decision making around the globe, the survey seeks to identify the most important opportunities for growth and what, in the opinion of the respondents, Government policy might support these objectives.
The annual average space take-up in the Logistics and Retail areas has been over 306,000 square metres, the report shows a 2024 figure of just under 150,000 square metres, the lowest level since 2011. CBRE does, however, predict that 2025 will return to a higher level. Interestingly, in the context of current and predicted levels of international economic disruption, the report says that the larger pharma groups, unlike many other multinationals, tend to own their own buildings, rooting them more firmly in the local economy. Logistics and storage occupiers are the tenant group that account for the highest proportion of industrial unit demand, scoring 46%, with light industry being the next largest group with 20%.
Despite 2024 being a slow year for the leasing market average rents rose during the year by 4% to €146.30 per square metre and CBRE are predicting that the 2025 figure will reach €156 per square metre. A factor within the rent increase is that there are no new buildings currently under construction in Dublin that do not the highest sustainability standards of LEED “Gold” and a BER of A3.
Holly Loughman, Head of Sustainability at Kingspan Group moved the focus to the potential to re-develop existing buildings to meet the current standards. While some 57% of the report’s respondents expected to acquire new build properties, some 39% expect to use existing building stock. The Kingspan view is that whilst a new build can readily be designed and built to meet current standards, the real challenge and the greatest environmental contribution can be found in upgrading existing stock. They see one of the biggest incentives in the drive towards greater sustainability is the availability of ‘green’ finance, vying with customer led pressure and government-led regulation as motivation to engage with these initiatives.
Asked how they found business conditions compared to those 12 months previously, 44% of the Logistics Operators found them to be somewhat more difficult and 20% to be much more difficult, 20% found them to be like the previous year while 12% found them to be more favourable. Looking ahead for 2025, more than two-thirds of Logistics Operators expect conditions to be more difficult.
On the question of 2025 business growth, 64% of Logistics Operators expect to increase their employee headcount during the year while 60% of the sample are forecasting higher profits for 2025 and 64% say that ‘very likely’ they will incur significant capital expenditure in 2025.
For manufacturing and retail groups some 12% of respondents expect to reduce their supply chain headcount in 2025. This is significantly more than the previous year when the figure was 2% and is the highest level in the 10-year CBRE report series going back over the decade.
In the area of e-commerce, over half the companies stated that recruitment is a challenge in managing growth of their online operations while 14%, which is double the 2024 percentage, are challenged to find optimal locations for their fulfilment operations.
The event was rounded off by a presentation from Paula Quinn, Managing Director for UK and Ireland of Keune & Nagel. She remained optimistic that despite the geo-political challenges that growth in Ireland will continue. The operation workforce in Ireland is five times per head more productive than in some other marketplaces. This event was also the final one attended by Aidan Flynn in his role as CEO of the Freight Transport Association Ireland, as he moves on to greater challenges outside the sector. Howard Knott