Commercial property specialists, CBRE today released their first bi-monthly report for 2017 focusing on recent trends and transactions in all sectors of the Irish commercial property market.
The property consultants say that momentum has been slow to build in the commercial real estate sector during the opening months of 2017 with few large assets launched for sale and not a huge volume of transactions being completed during January and February.
However, CBRE say that is normal for the time of year and masks considerable activity behind the scenes, particularly on the development front. They believe that the bulk of transactional activity in many sectors of the market in 2017 will occur in the second half of the year as opposed to the first six months.
The report notes that despite a dearth of transactional activity since the beginning of 2017, there has been a notable increase in demand for office accommodation over recent months with several new requirements having been activated since Christmas. Occupiers with active requirements for office accommodation at present include Facebook, IDA, New Relic, Allergan, Eversheds, Indeed, WeWork and Huawei. Many of these requirements are unlikely to translate into completed leasing transactions until at least the second half of this year.
There are now 27 office schemes under construction in Dublin city centre, totalling more than 360,000m2 between them with 20% of this stock already pre-let. CBRE don’t expect to see a large number of new planning applications for office accommodation being lodged from this point forward, considering the volume of office stock that is currently under construction in the capital and the number of schemes with a grant of planning that can be delivered if demand materialises.
Prime headline office rents in Dublin are currently steady at approximately €673 per square metre (€62.50 per sq. ft.) while there has been some upward pressure on prime rents in the suburbs of the city over recent months.
Dublin ranked 3rd in the Top 5 European data centre markets last year having achieved higher volumes of data centre take-up than Frankfurt and Amsterdam. CBRE have witnessed continued strong demand for data centres since the beginning of the year and expect this trend to continue due to a number of favourable economic, political and policy factors.
By virtue of the fact that the industrial sector is anticipated to generate the highest rental uplifts in the Irish commercial property market in 2017, there has been a notable increase in investor appetite for industrial investment opportunities, particularly those that offer scale.
CBRE say that the biggest frustration in the market at present is the scarcity of prime product to satisfy investor appetite considering the dearth of opportunities formally offered for sale during January and February. However, they expect this to change over the coming months as we move towards the traditional selling season and momentum picks up. The property consultants say they have noticed an increase in the number of private investors bringing assets to the market for sale over recent months which will hopefully alleviate pressure to some extent.
Commenting on the research, Executive Director & Head of Research at CBRE Ireland, Marie Hunt said, "Appetite for prime investment opportunities in the Irish market has intensified noticeably over recent months with international core capital remaining active buyers, which could actually lead to some further hardening in yields for prime high street and prime office assets in due course."
She added, "However, a heightened perception of risk has negatively impacted demand for secondary assets of late, which could have the opposite effect on pricing for such assets as the year progresses. The occupier markets continue to perform well, buoyed in particular by the strength of continued employment generation in the Irish economy."
Source: www.businessworld.ie
