Upswing for commercial property predicted

THE COMMERCIAL property market is likely to emerge this year from “the most significant and unprecedented crash it has ever experienced”, according to real estate firm CB Richard Ellis (CBRE).

The Dublin office of the international commercial property specialists said a “notable improvement” in transaction volumes was expected in many sectors of the Irish market in 2011.

It said the potential recovery would come as a result of banks, borrowers and the National Asset Management Agency bringing properties to the market.

Some 29 investment transactions with a total value of €241.7 million were made in the Irish market in 2010, according to CBRE. It described this as “a marked improvement” on the 13 investment sales totalling €92 million that occurred in 2009.

Transaction volumes are expected to increase further in 2011, with the bulk of demand for prime investment properties emanating from overseas.

No rental growth is anticipated in any sector of the commercial property market in 2011. Rents are expected to experience further declines over the year, CBRE said.

Some 187 office lettings totalling 130,000sq m were completed in the Dublin office market in 2010, which CBRE said was “a very encouraging level of take-up”.

High-end software companies, pharmaceutical groups and companies from the online gaming industry are likely to take up the most office space this year.

Their interest in lettings will help erode the high levels of vacancies in the office sector, according to the estate agent firm. However, declines in the floor areas rented by banking and public sector tenants “could dampen this effect”.

In the retail sector, CBRE said there was still demand for prime locations, despite the growing number of high-profile retailers going out of business. Shorter leases and frequent break clauses will become more prevalent, as will the number of temporary traders or “pop-up” shops.