Increase in online shopping prompts spike in demand for warehouse space in Limerick

AN INCREASE in online shopping has resulted in a spike in demand for warehousing space in Limerick.

That's according to two leading city auctioneers, who have expressed positivity in the commercial sector as the local and national economy recovered from the Covid-19 pandemic last year.

Tom Crosse, GVM Auctioneers and Gordon Kearney, Rooney Auctioneers, have also reported that despite another impact of the coronavirus lockdown - that of working from home - demand for office space in the city remains high.

Mr Crosse, who trades in Glentworth Street in the city, said: "The warehousing market has been the big winner with all historically vacant units now occupied with new suitors either as purchase or investors."

The demand for this type of space is not just because of a rise in online shopping, but also substantial price increases in Dublin, and the comparative lack of warehousing stock in the regions, he added.

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Contributing to this, Mr Kearney said: "There has been extremely low levels of construction of new warehouse and industrial space resulting in existing stock being in high demand with competitive biddings on most sales throughout the year."

One thing which has impacted across the board when it comes to property, both residential and commercial, has been the rise in construction costs - both labour and materials.

Mr Kearney, whose auctioneering firm is located in the city centre's O'Connell Street, said it led to demand for development land dropping last year.

But sales of commercial interest properties were very active in the first six months of 2022, something he puts down to negative interest rates being applied to large deposits held in banks.

"Large depositors sought a better return on their deposits and invested heavily in commercial investment properties and land," he explained.

"However, since positive interest rates have now returned, activity levels on commercial investment properties have waned somewhat."

Mr Crosse says there has been a "very robust" local commercial market this year, with rental for office space up around 10% year-on-year.

"Rental levels in business parks is ranging from €15 to €20 per square foot with good grade A space in the city centre averaging €25 per square foot.

“There appears to be growing interest in the good quality accommodation," he added.

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In terms of commercial sales, GVM notably sold development sites in Kildare town centre - which will be used for a school - and land for a shopping arcade in Tullamore, Co Offaly.

In October last, the flagship tenant at the city's Opera Centre development, Revenue, admitted it would be reconsidering the number of people it planned to work at the heart of the space due to the rise in the number of people working-from-home.

It sparked fears given Revenue's importance to the massive public project.

Mr Kearney pointed out that a number of Rooney's clients who had discussed fears of having "superfluous" office accommodation were, however, beginning to change tack.

"[They] are now informing us that they expect a return to office policy implemented in 2023 and therefore they will no longer have superfluous office space," Mr Kearney concluded.