The construction site of the Vantage warehousing complex in north Dublin is an unmissable sight for anyone driving into the city on the N2. Not that the skeletons of new industrial buildings are anything unusual in this well-connected area, but the 18-metre-high structures now emerging along the dual carriageway are entirely made of timber.

During a site visit on Monday, I asked Laurence Flood, director of the project’s developer Newpark Real Estate, how new this use of wooden construction materials was in Ireland. “It hasn’t been done on the scale that we’re doing it, ever before,” he replied.

Timber frames are common for detached houses and pieces of commercial buildings, one visible example being the roof structures of many Lidl stores around the country. Glue-laminated timber (known as glulam) is also gaining traction in continental Europe for apartment blocks and industrial buildings.

The timber-framed Vantage warehouse park under construction in Coldwinters, Co Dublin.

In Ireland, however, the material has yet to gain any significant market share among larger projects. Newpark previously developed phase one of the Vantage business park using steel. Next door to the phase two site, the recently completed Unit 4 of the Quantum warehousing complex, now home to Maersk, does have a primary glulam structure, which contributes to its claim of being “Ireland’s first net-zero logistics building,” according to its developer Iput.

But Flood argues his site is going further: “What we’re doing here is primary and secondary structure. And we’re doing it across all four buildings.” This means the supporting frame of the buildings and the layer used to attach cladding and insulation to it are both made of wood. The floor area now under construction using this method totals 35,000 square metres.

75% less embodied carbon

Architect Achim Gottstein says using timber instead of the usual, tried-and-tested steel beams requires a different design approach to address the way various parts of the building fit together and fire prevention, but this does not mean extra cost.

The main benefit of the change in material is, of course, environmental. Steel production is a major emitter of greenhouse gases, while wood locks in carbon sucked out of the atmosphere by trees during their growth. According to calculations supplied by the development team, the use of glulam on this site’s four buildings will reduce embodied carbon emissions by 75 per cent compared to steel, saving as much carbon dioxide as that released by 5,250 passengers flying from London to New York.

Gottstein says greenhouse gas emissions are part of a wider plan to boost the project’s sustainability credentials. It includes transparent cladding around part of the buildings to reduce the need for indoor lighting (and show off the wood structure to passing traffic), the planting of 3,000 trees, and surface water management designed to provide habitats for wildlife.

Flood adds that Newpark is providing a cycling and walking path on a council-owned strip of land between the buildings and the road, connecting with local bus stops and ultimately the planned terminus of the Luas extension to Charlestown.

Architect Achim Gottstein was first to pitch the idea of timber frames to developer Newpark Real Estate. Photo: Thomas Hubert

Yet in the quest for green certification, there is only one place to start: “The biggest carbon cost upfront in the pre-completion stage is the structure of the building. That’s where the biggest wins can be made,” says Gottstein.

While it should not be forgotten that the complex will facilitate road traffic by providing bays for up to 37 lorries to dock at any given time, its promoters insist that the building itself will meet the Leadership in Energy and Environmental Design (LEED) gold rating, the second-highest available under the international standard.

This is a step up from the silver rating achieved by Newpark in the completed phase one of the Vantage business park, and there is a cost to that. Flood says it is difficult to compare costs between the two phases because the buildings have different specifications, but he is clear that a key factor in the choice of timber was a jump in steel prices of over 20 per cent at the start of 2022.

“The main supplier of infrastructure steel in the Irish market is British Steel, and they put their prices up in the first quarter of last year by around £300 a tonne,” says Flood. “We have a lot of tonnage here in four buildings, and it was a good time to pick the glulam up again and have a serious look at it.”

“The whole site is like a 3D puzzle”

Architect Achim Gottstein

The developer says the idea came from the architect. Irish-born Gottstein is from a German background, in the region of Europe most advanced in its use of timber buildings. The glulam used here is supplied by manufacturer Wiehag in neighbouring Austria and erected by Baucon, a German contractor with Irish operations and worldwide experience.

There are plans to manufacture similar products from Irish wood and the University of Galway is home to a Timber Engineering Research Group focused on developing this industry, but for the time being, northern Europe is the main supplier of large glulam structures.

Wiehag supplies the whole package and subcontracts assembly to Baucon, delivering a stream of factory-drilled pieces ready to accommodate fixings and services, each QR-coded for workers to locate on digital plans. “The whole site is like a 3D puzzle,” says Gottstein. While few Irish contractors currently have the specialist skills required to do this job, he says that steel erectors could easily train their existing crews to acquire them.

Glulam elements are supplied from Austria by Wiehag. Photo: Thomas Hubert

When the architect first put the timber idea to Newpark in 2020, he says it started a conversation that many in the industry would approach with “a healthy dose of scepticism”. This had to include the investor already lined up to back the development – an increasingly familiar name behind bolder property plays in Ireland.

Bain Capital, to be fair to them, were open to it,” says Flood. “This is the first industrial and logistics scheme they’ve done in Ireland, so it was all new to them anyway.” Between Newpark, a small family-owned developer, and Bain, a global investment firm with a nimble Dublin-based team that has its pulse on property investment trends across Europe, it was easy to come to a quick decision, Flood says.

The US-headquartered private equity and alternative credit giant Bain Capital is investing in phase two of Vantage business park through Abbey Issuer DAC, a 2021 subsidiary of its Irish fund Bain Capital Credit Global Icav. Company filings and planning documents show that the company initially raised €16.2 million in quasi-equity loans from the Bain fund – €4.1 million interest-free and €12.2 million on which it is returning 10 per cent annual interest.

Abbey Issuer then purchased the Vantage phase two site with planning permission secured for three warehouses totalling 25,000 square metres, and successfully applied for a final unit adding another 10,000 square metres. Its accounts to the end of 2022, when ground works were starting, valued the property at €16.6 million.

Over €100 million available to fund the project

The project subsidiary has up to €65 million in finance available through Bain facilities. Then in May of this year, just before timber frames began to sprout up, it reported securing another multi-tranche loan from Pimco. There is up to €52.6 million in secured leverage debt available to draw down from the US-based global lender. With over €100 million lined up, the project is more than comfortably financed.

Flood won’t confirm at this stage how much of these funds exactly will be spent before construction is due to complete by mid-2024. “It has been an area that has been challenging for the entire sector in the last 12 months with much-talked-about construction cost inflation,” he says. “What we are seeing in a more positive light, however, is continued rental growth, projected to rise above €13 per square foot in the short term and continue to rise, particularly for prime locations such as Vantage business park. This is primarily due to strong occupier demand and an all-time-low vacancy rate of around 1.5 per cent.”

Flood, who is 44, says his early career in the family construction business was spent serving Irish owner-occupier companies looking for new premises. “That’s changed now. There’s a lot of institutional money coming in,” he says “These large pension funds now want to come in and they want, basically, what’s seen as very steady income from these industrial buildings.”

Laurence Flood: “They’re very specific on the type of buildings they go into.” Photo: Thomas Hubert

Before those investors acquire the buildings, Newpark and Bain must find tenants. Flood says there is strong interest, with heads of terms expected to issue to the first occupier for one of the four units in the coming weeks. Although he admits that he doesn’t know yet whether the investment in higher environmental credentials will return a matching premium, this is part of the discussion.

“A lot of companies are looking at our buildings and our design strategy – not just the glulam, but everything else we’re doing, how that fits into their own internal ESG requirements,” he says. “One of the companies, for example, that is looking at one of the buildings here at the minute is an Irish company recently bought by a very large German company, and they’re very specific on the type of buildings they go into.”

“He can win points in his tender process if he can demonstrate that his buildings are more sustainably built.”

Developer Laurence Flood

This is not restricted to investor-owned, rented industrial buildings, however. Flood says he is in discussions with another client – an Irish company owner commissioning a design-and-build project for new premises on his own land. “He’s very, very interested in doing that in structural timber,” Flood says. “One of the reasons for that is that a client of his is a large data centre operator, and if he’s tendering for contracts with some of these data centre operators, for example, he can win points in his tender process if he can demonstrate that his buildings are more sustainably built.”

Gottstein said he gets similar requests: “We have a UK client at the moment who is exactly the same as what Laurence just described. They want a building designed for 2030, for net zero, because it’s commercially advantageous to them in winning contracts.”

Steel contractors could train their staff to erect timber-framed industrial buildings. Photo: Thomas Hubert

There may be another advantage to timber-framed buildings in an environment where employers are competing for staff, especially in physically demanding jobs like warehouse operations. Already, standing in the shell of the most advanced unit on the Vantage phase two site, the wooden surroundings give a feeling of comfort. Gottstein says one of the advantages of the material will be reduced noise for those working inside.

On a visit to their supplier Wiehag, Flood and Gottstein visited a local customer of the manufacturer. “That company in Austria had three generations of buildings: concrete, steel, and structural timber,” Flood recalls. “They had to rotate staff because they all wanted to work in the structural timber building. Nobody wanted to be in the sort of old, dour, gray, concrete or steel building. That’s going to be very interesting to look at in a few years time when we look back and say: ‘Actually, how are these buildings operating now? Do people enjoy working in them?’ I think the answer is probably yes.”