Prime and secondary retail rents could fall by 11pc and 13pc respectively over the 12 months to the end of September 2021 according to the latest survey of Irish chartered surveyors. At the same time prime and secondary office rents are expected to fall by a respective 5pc and 7pc over the same period according to the Ireland Commercial Property Monitor published by RICS in conjunction with the Society of Chartered Surveyors Ireland (SCSI).
Pointing out that the Irish market remains very much under pressure amid the challenging economic climate induced by the pandemic, it found that both office and retail vacancies appear to be rising at the sharpest pace since 2010. The net balance of respondents reporting an increase in vacancies across the office sector was 45pc in Q3 almost three times the 16pc level seen in Q2. For retail, the net balance stands at 49pc versus 46pc in Q2.
By way of contrast, prime industrial and warehousing rents are expected to rise by 2pc, although respondents envisage a 1pc decline for secondary industrial rents over the year ahead.
Declan Bagnall, chair of the SCSI Commercial Property Group, said: “Occupier and investment sentiment is back to 2010 and 2012 levels respectively. Irish sentiment, generally speaking, is following the global trend in this regard, and our capital/rental projections also sit mid-table.
“Clearly, the increased lockdown restrictions both at home and abroad is a big factor in these results. With the second wave well underway in many countries most businesses are putting investment/expansion plans on hold until they have more certainty in terms of when this pandemic will be brought under control.”
On the investment side of the market, the survey found that buyer enquiries fell for office and retail properties, while industrials were practically unchanged. Overseas investment enquiries fell right across the board.
Prime industrial is the only area where capital values are expected to show gains, albeit marginal, over the 12 months.
Almost three out of four respondents report that the commercial real estate market in their area is in a downturn currently, A net balance of 51pc of contributors saw an increase in inducements across the office sector.