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Empty offices refute claims commercial units at bottom

MANY people own houses, so it is relatively easy to get some sense of how the residential property market is performing -- but few of us own an office block, which makes it difficult to understand what is happening in the commercial market.

One man who has a pretty good understanding of the non-residential market is Rob Kitchin, a geographer from NUI Maynooth who leads the National Institute for Regional and Spatial Analysis.

During an excellent conference on economic issues held in Croke Park last Friday, Dr Kitchin used data collected from various industry sources to present an eye-popping set of statistics which painted a grim picture for anybody trying to fill an empty office these days.

He noted that property experts Savills and Trinity College's Centre for Urban Regional Studies calculate that Dublin had the equivalent of 206 Liberty Halls lying vacant back in 2009.

They also calculate that around 15pc of all office space in Dublin 2 is vacant.

The situation is even worse in Dublin 4 where a quarter of office space is empty, while suburbs such as Blackrock and many parts of the capital's northside have vacancy rates approaching 45pc.

The situation in our towns and shopping centres isn't much better and it's not difficult to work out why; retail space in Ireland doubled between 2005 and 2010 while sales fell.

Boarded up shops

Those two simple facts explain why almost all our main commercial streets are disfigured by boarded up shops.

Dr Kitchin was among the experts who forecast a collapse in property prices a few years ago and he sees no reason to call the bottom yet for commercial property.

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With statistics like these and so many vacant shops and offices, it would be fascinating to know what methodology the National Asset Management Agency used when it told investors that the slide in commercial property prices has bottomed out.

It added that home prices still have some way to go.

This would be worth knowing because NAMA now plans to use our money to offer guarantees for those who want to buy empty offices.

The agency's most recent results, published on Tuesday, reveal that NAMA is also still looking for permission from Europe to extend this scheme to those wanting to acquire residential property despite the NTMA's stated belief that residential prices have further to fall.

It will be interesting to see whether NAMA or Dr Kitchin proves to be right in the months ahead. My money is on Dr Kitchin.

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