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Commercial real-estate body eyes international expansion

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Paul McNeive

Paul McNeive

Paul McNeive

The Society of Industrial and Office Realtors (SIOR) will bring over 250 brokers from the US and Europe to Dublin for their international conference from July 15-17 this year.

SIOR is the leading global office and industrial real-estate association, with more than 3,400 members in 686 cities and 38 countries around the world.

Mark Duclos is the current SIOR global president and I met him on a recent visit to Dublin, together with Paul McDowell, president of the Irish Chapter of SIOR and James Mulhall of Murphy Mulhall, also an SIOR board member.

We discussed the organisation's international expansion plans and some interesting differences between the US and Irish markets.

Mr Duclos told me that SIOR is "firstly about creating relationships, and then improving access to markets".

Membership of SIOR is far from a formality, and potential applicants are vetted to ensure that they are "high-quality people, with market experience, and deal-making ability" whom members can rely on when referring on their clients and enquirers.

Membership is "hard-earned, and you must clearly demonstrate that you are an expert," Mr Duclos said.

Applicants must reach a minimum threshold for fee income earned, and that level is set by the local chapter.

Only 1-2pc of US brokers are members of SIOR, Mr Duclos told me.

Members pay an annual membership fee, in the order of €1,000, part of which goes to support their local chapter.

As well as connecting people, SIOR seeks to raise standards in the profession, and members are bound by a code of ethics.

Research and educational events are arranged, including visits to notable office and industrial developments around the world.

James Mulhall, a leading Dublin office agent, told me that the site visits abroad were particularly helpful in recognising future international office trends, and potential issues like servicing high-rise office buildings, and the impact of driverless cars on urban environments.

Members will soon be visiting a "first of its kind" three-storey warehousing development in Paris.

"The members are generous with their time, and are a source of knowledge," Mr Mulhall said.

SIOR members wear a silver pin and as Mr Mulhall told me, in the US in particular, members put their SIOR membership on an equal footing with the firm where they work, such is the weight of the SIOR brand.

Given the tsunami of US and other overseas companies locating in Ireland, it must make enormous sense for Irish professionals to be maximising their networks abroad, in order to secure instructions. There are though, some fundamental differences in how the US and Irish markets operate, particularly around the payment of agent or broker fees.

For example, in the US, the landlord pays the fees of both his own agent, and the agent representing the tenant.

All agreed that this gives rise to potential conflicts of interest, and could not happen here, however, that is the established system in North America.

Also, fee levels vary considerably across US regions, and expectations must be managed at the outset of any instruction.

For a deal in the United States, fees are based on the aggregate value of the rent, over the total of the lease. For example, a fee for an office letting could be 5pc of the first five years' rent, plus 2.5pc of the total rent over the second five years.

Mr Duclos also pointed out that it has become common for the tenant company to look for a share of their own agents fees to be paid back to them.

"The larger companies will have their own 'tenant-rep' department," he said, "which will be a profit-centre in its own right."

I asked Mr Duclos, who is also the president of Sentry Commercial in Connecticut, for his views on the US market and he believes that "everything is looking very good".

"Whilst the e-commerce and industrial side might be slightly softer, the IT sector remains strong," he said.

For more information go online to sior.com.

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