The pace of Ireland’s economic recovery, which is ongoing since early 2012, has recently stepped up a gear. GDP expanded by 7.7% in the 12 months to June underpinning Ireland’s status as the fastest growing economy in the Eurozone. This is partly due to the re-emergence of domestic demand with consumption, investment and Government spending all now contributing positively to growth. However, despite sluggish growth elsewhere in the Euro Area, external trade is also playing a major part in the recovery with net exports continuing to grow strongly.
Interestingly, because imports (an outflow of money from the economy) are netted against exports (an inflow) in calculating economic growth, the standard GDP measure tends to understate the demand for logistics space. Goods equally need to be warehoused when they are entering and leaving the country. As such the demand for shed space should benefit from increases in both imports and exports.
As shown in Graph 1, this logic is borne out in practice. With the Irish economy performing well on the international stage, goods exports have been rising. However, the strengthening consumer economy has also led to increased imports. This offsetting factor means that net exports have only risen by 5% in the past year. In contrast, the combined sum of goods imports and exports has increased by a much stronger 8.5%. This helps to explain the upsurge in demand for industrial space which has driven take-up to a record high of over 90,000 sq.m. in Q3
Source : Savills