According to the IAVI, the annual take-up levels of office space in Dublin are expected to drop sharply by up to 75% this year, in comparison with 2008. For 2009, around 50,000 square metres of space is expected to be taken-up, with a similar level projected for 2010. This is down from 200,000 square metres in 2008 and from an all-time high of 300,000 square metres in 2007.

Roland O’Connell, of the IAVI National Council’s Commercial Panel said, “This is the lowest level of commercial office space take-up that we have seen since the mid-1990’s and we anticipate that these difficult market conditions will continue until mid to late 2010.

“We have experienced a significant drop off in activity from financial and professional services companies as a result of economic conditions and our competitiveness must be restored before demand will increase again. Construction has effectively stopped as the outlook has deteriorated as economic activity contracts.

“For the immediate future, we can expect to see lower rents and more flexible lease arrangements. In the medium term it is unlikely that there will be many new developments or major upgrades due to the lack of credit finance and as a result we can expect refurbishment to become more attractive. Demand for second-hand office space in preference to new space has increased as tenants wish to avoid fit out costs. ,” he said.

Increased pressure on retailers with retail sales volumes down by 20.9% according to Retail Excellence Ireland figures in February 2009 have led to difficulties in the retail property market.

According to Larry Brennan, Director, Savills, “We estimate that rents have dropped by 25-35% in certain locations and we are seeing a trend towards more European lease structures in terms of payment and lease terms.

“Planned developments will struggle to secure finance and funding and banks may demand pre-let levels which may prove unachievable in the current environment,” he said.

The industrial market has also suffered a decline in take-up levels of approximately 36% from 2.5m square ft. in 2007 to 1.6m square ft. in 2008.

Nigel Healy, Director, Jones Lang LaSalle said, “Transactions are down quite significantly and if we look back at the history of previous downturns, it would suggest that it could take a significant period of time to recover to the levels that prevailed in 2006/2007. That does not mean that some improvement won’t take place in the interim as the market stabilises”




ENDS

For more information, please contact Carina O’Neill, Bracken Public Relations on 01-6773277

Presentation highlights:

Office Market – Roland O’Connell, Director, Savills
• Annual take up levels have dropped by 75% since 2008.

• City-wide vacancy rate in January 2009 was approximately 15.6% - anecdotal evidence suggests its still rising. The city centre vacancy rate is in the region of 13% and the suburban vacancy rate is up 25%.

• Loss of competitiveness through the boom years has been identified as a key hurdle which the Irish economy must overcome if prosperity is to be restored.

Retail Market – Larry Brennan, Director, Savills

• Retail Sales volumes declined 20.9% annually in February 2009 reflecting the reluctance of consumers to spend in the current climate

• The value of retail sales fell 23.4% in the same period reflecting the deep discounting that retailers are engaging in to lure shoppers.

• The pressure on retailers has resulted in rents dropping by an estimated 25-35% in certain locations

• Established, well-serviced schemes will perform better than newer, less established schemes

• Drive towards more European type of lease agreements in relation to lease terms & payment structures

Industrial – Nigel Healy, Director, Jones Lang LaSalle

• Very low volume of transactions

• Take up reduced by 36% from 2007-2008 (from 2.5m Sq. Ft. in 2007 to 1.6m in 2008)