Friday, 22 December 2006

Port Tunnel pushes up northside land prices

The northside is to benefit from the tunnel ...

The opening of the Dublin Port Tunnel (DPT) is already beginning to have an impact on industrial property values on the northside of Dublin. This increased level of activity in and around the tunnel entrance is likely to accelerate over the next twelve months and the benefits the tunnel will bring to the area will shift the focus of Dublin's industrial market from the west to the north of the city in the medium to long-term.

On opening, approx. 9,000 HGV's will be removed from the local road network in Dublin each day. Travel time from the Port Tunnel entrance at Santry to Dublin Port, which can take up to one hour on the N1, will be just seven minutes. There will be no toll charge applied to HGV's using the DPT, however, cars will pay a premium toll rate during peak hours, falling to a standard toll charge at off-peak times.

The reduced travel time to Dublin Port from the M50 will help the continued development and attractiveness of Dublin Port resulting in shorter, more reliable delivery times for business and industry. A reduction in travel times to and from the Port will help increase profitability and improve competitiveness for logistics, transport, manufacturing and distribution companies many of whom are operating in a low margins market.

A stringent enforcement strategy will have to be undertaken by Dublin City Council to ensure that the tunnel is effective in its objective. A decision has yet to be made in this regard but there are a number of options under consideration. These include:

  • Time restrictions on access within the canal cordon
  • Restrict HGV access within the canal cordon to permit holders only
  • HGV tolling at the canal cordon

Regardless of which of the above enforcement strategies is applied, companies within close proximity of the tunnel entrance will have a competitive advantage over their competitors. They will have toll free access to the port whilst benefiting from the most time and fuel efficient means of accessing the port.

Companies going to or coming from the south or south-west of the City, will have to face toll charges, either at the West Link or the canal cordon. These charges and/or time restrictions will have an impact on operating costs and are likely to make some companies more competitive than others simply because of their location on the north side of Dublin.

With the Airport and recently opened M1 extension to Drogheda, the north side of the city already has much to offer occupiers in the industrial property market. However, the opening of the Port Tunnel next year will create a frenzy amongst occupiers as they battle it out for land and buildings which will give them access to the country's most important infrastructural project.

Areas already benefiting from the proposed new infrastructure include Santry and Clonshaugh, both of which are situated at the entrance to the Tunnel. At Clonshaugh Industrial Estate vacancy rates have plummeted over the last twelve months. One of the most recent transactions on the estate was the sale of the 30,000 sq. m. former Gateway 2000 facility for €16m towards the end of last year. This building had been vacant for almost three years at which time there was approx. 100,000 sq.m. of space available in Clonshaugh. This vacancy level stands at just 20,000 sq. m. today.

There are a number of older industrial estates within close proximity of the tunnel entrance which have potential for significant capital growth when it opens in 2006. Values on these older estates had been hardest hit when the industrial market weakened in 2002 & 2003. Many units have been available on these estates for a number of months and are now available at good value to purchasers. These estates include Dublin Industrial Estate, Airways Industrial Estate and Malahide Road Industrial Park, all of which are within minutes of the entrance to the Port Tunnel. Values on these estates may accelerate when the tunnel opens and the benefits of these locations become evident.

A price of €3.3m was secured in January for a 1.33 hectare site on the old Airport Road opposite Airways Industrial Estate. The site which is located approx. 2kms from the tunnel entrance had been on the market for over three years. These transactions are evidence of the pent-up levels of demand from investors and owner occupiers for good quality land and buildings which provide easy access to the Dublin Port Tunnel.

An area set to benefit significantly from opening of the Port Tunnel is Balbriggan. With the M1 Motorway extension from Dublin Airport to Courtlough now completed, the Port will be just twenty minutes from the Balbriggan / M1 Junction. Balbriggan also enjoys a good road network via the M1 to Belfast and the improvement in access to Dublin Port may encourage more northern companies to develop smaller hub sites in Dublin. Land values in the area are currently in the region of €450,000 - €500,000 per acre and have obvious potential for significant growth over the next 2 to 3 years.

Two major business parks will be developed in Balbriggan during this period including Fingal Bay Business Park, a joint development between Howard Holdings and Fingal County Council. Already, an 80,000 sq.ft hi-bay warehouse has been completed for Bridgestone Tyres as has a 30,000 sq.ft office building for the Passport Office. Treasury Holdings has commenced development on the M1 Business Park, a new 80 acre development at the M1 / Balbriggan junction.

Balbriggan has the potential to become a prime industrial area over the coming years with significant road improvements under way in the immediate area coupled with easy access to the Port. At a time when many companies are adopting a "wait and see" approach to the industrial market, there is an opportunity now to capitalise on the current market with the potential for a significant uplift in values in the short to medium term.

Fingal County Council is expected to adopt its new development plan this summer. Significant landbanks are likely to be rezoned from agricultural/amenity uses to industrial, particularly between the Ballymun and M1 junctions on the northern side of the M50. This increase in the supply of industrial land is not just a result of the region's increased capacity to service more land since the completion of the Northern Fringe Sewer two years ago. It also points to the Council's aspirations for significant development and growth during the life of the new plan and the DPT will have a fundamental part to play in achieving these goals over the coming years.

Despite the higher than expected costs of providing the Tunnel and the ongoing political debate on increasing its height for super-cube trucks, the opening of the Dublin Port Tunnel in 2006 will exacerbate demand amongst owner occupiers and developers for industrial land and buildings across the north side of Dublin.

No comments: