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Signs of stabilisation in office and retail market as optimism returns
30 May 2010 By Michelle Devane
A survey by the Society of Chartered Surveyors (SCS) indicates increased optimism in the office and retail markets, but the volume of enquiries from prospective tenants still remains low compared to historic averages.
The quarterly survey shows that the pace of decline in the volume of lettings being completed in the commercial property market in the first three months of the year has slowed, compared to the last quarter in 2009, indicating that the market is stabilising.
The volume of available vacant property is continuing to rise, according to the findings, and rents and the length of new leases are potentially set to fall further this year while the value of inducements will increase.
While the number of retail lettings fell during the first quarter of the year, it did so at a much slower pace than in the last quarter of 2009.
The office market was more positive with the number of lettings being completed during the first quarter of the year holding steady following a large decline in the last quarter of 2009.
As with the retail sector, the survey indicated that increasing office vacancy levels will force rents for the sector to fall at a faster pace in the second quarter, than at the beginning of the year.
The findings are based on the responses of chartered surveyors in general practice and valuations to a detailed questionnaire completed earlier this month.
Almost all respondents believe the bottom of the property market had not yet been reached.
The respondents also believe that further general declines in rents and capital values may occur during in the second quarter of this year. Peter Stapleton, president of the SCS, said the results were not surprising, given the relative inactivity in the market, but he said the fall-off in the level of enquiries along with the clear oversupply of offices was making a definitive contribution to Irish competitiveness.
‘‘Occupancy cost s are clearly re-adjusting at a level which is bringing us more into focus on the global stage for inward investment and we believe that in time we will see positive results in this regard," Stapleton said.
More than half of the survey respondents believe Nama will assist in the recovery of the property market. But almost a quarter said it would not assist. Stapleton said it was heartening to see that most surveyors felt Nama would help the property market recover.
The special resolution on a merger between SCS and the Irish Auctioneers and Valuers Institute (IAVI) will be decided in the coming week and Stapleton said he hoped that members would support the recommendation of the SCS Council and vote positively in favour of it.
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