Galway rents stabilise in first quarter of 2010
Rents for some sectors of the Galway commercial property market stabilised during the first quarter of the year after having earlier fallen sharply from their 2008 peaks.
In all sectors of the city and suburbs rents for larger industrial units at €54 per sqm have been unchanged over the six months to March 2010 while the purchase price for similar units are also unchanged at €1,291 per sqm.
These are among the latest findings in the DTZ Sherry FitzGerald (DTZSF) survey of the Galway market for the first quarter of this year.
Smaller units in the east of the city are also recording unchanged rents at €65 per sqm although the purchase price for these units fell by about 17pc to around €1,615 per sqm over the six months.
On the west of the city, smaller industrial units have seen rents fall by about 16pc to €54 per sqm and prices by about 20pc to around €1,291 per sqm over the six months.
Rents for third generation offices in the city centre suffered the sharpest fall since the market peak in 2008 -- down 39pc and now range between €161-€194 per sqm. Similar suburban offices saw rents fall only 20pc to a lower €129 per sqm.
DTZSF comments that enquiry levels continued to increase during Q1, as occupiers began to re-emerge in response to the good value in the market.
"As the gap between rents in the city centre and suburbs continues to narrow, city centre offices are becoming more affordable. There is emerging evidence that this is impacting demand as almost 70pc of the offices occupied during Q1 were in the city centre. Despite the large volume of available space signs of stabilisation in terms of rents emerged. However, rents are also being backed up by increasingly attractive incentives as competition between landlords intensifies," says DTZ SF economist Marian Finnegan.
Take-up of office space fell to only 650sqm during the quarter and availability, at 48,000 sqm, accounts for 16.7pc of stock. Nevertheless this is a healthier vacancy level than the 20pc plus levels in Dublin, Cork and Limerick.
The level of supply in the office market rose steadily throughout 2009, however, as the year progressed the rate of increase diminished considerable from a quarterly high of 46pc in quarter one 2009 to an increase of 5pc during the final quarter of the year.
This trend continued in the opening quarter of 2010 with a 2pc increase recorded in the level of available space.
Ms Finnegan pointed out that the improved supply has increased availability to a very high level.
"The increase in supply during the quarter was driven by the continued release of second hand space to the market and reflects a 28pc increase in the quantum of available offices compared to the same period in 2009," she adds.