Industrial rents in Dublin rose by twice the European average in 2007, propelling Dublin up the league table of most expensive locations, according to a new survey by estate agents Lisney, Cushman and Wakefield.

The report, 'Industrial Space Across the World 2008' - a comparison of prime locations in 52 countries - indicates that industrial rents in Dublin rose by 5% last year. This is twice the average rate of rental growth across Europe and almost four times the average in Western Europe, where rents grew by just 1.3%.

The survey reported that prime industrial rents in Dublin reached €124 per sq m per annum at the end of 2007, meaning that Dublin has overtaken Tokyo and Rishon Le Zion in Israel to become the second dearest location in the world.

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Dr John McCartney, Head of Research at Lisney said this reflects a number of factors.

"On one hand, rents have been driven up by tighter supply of industrial space in Dublin. This follows from the fact that industrial development has increasingly been displaced by higher end-use value development such as residential, retail and offices in locations close to the city," he said.

"This process has been facilitated by infrastructural improvements which have made surrounding counties such as Meath, Wicklow and Kildare more attractive locations for logistics occupiers.

"At the margin, higher financing costs have also caused some occupiers to lease industrial premises where they might previously have preferred to buy, and this is also having an effect on rental demand."

In absolute terms, London Heathrow remained the world's most expensive industrial location, and this status will be underpinned by the recent opening of Terminal 5 at the airport.

According to Dr McCartney, however, rental growth was generally stronger in emerging markets such as Central and Eastern Europe (7.1%), Africa/Middle East (11.5%), Asia Pacific (14.2%) and South America (25.0%).

"This reflects increased demand for space in emerging economies as manufacturers in the world's traditional industrial nations continue to outsource operations to lower cost locations," he said.

(VB/JM)