Upturn predicted in commercial property

THIS year is expected to see “a notable improvement” in both transaction volumes and values for commercial property — albeit more so in Dublin than elsewhere aroundthe country.

Twenty-nine investment transactions — with a combined value of €241.7m — took place in the Irish market during 2010.

This was a significant improvement on the 13 investment/€92m value ratio seen in 2009 and the positive trend is likely to continue this year.

In its 2011 outlook, published yesterday, the Irish division of international commercial real estate agency CB Richard Ellis (CBRE) said that activity should increase this year on the back of NAMA, the banks and borrowers all starting to unwind their positions and bring properties to the market.

“While conditions remain challenging in the commercial property market, the outlook for 2011 is somewhat better than it was only 12 months ago, with a notable improvement in transaction volumes anticipated in many sectors this year,” commented CBRE executive director, Marie Hunt.

She added: “However, other than the top tier of prime properties, demand remains weak and for that reason rental values and yields are expected to weaken further over the course of the year, creating a clear divide between prime and secondary assets.”

The rise in occupier levels, last year, beat expectations — 187 office lettings, totalling 130,000sq metres being completed in the Dublin office market qualifying as an encouraging level of take-up.

According to CBRE, the most active occupiers in the office sector are expected to be high-end software companies, pharmaceutical firms and the online gaming sector.

The company added that high levels of vacancy in the office sector will start to erode this year. However no rental growth is anticipated in any sector of the commercial property market this year.