Office market the only positive from survey
The office market is offering one of the few positive trends in the property market. Transactions continued to increase and Q2 was the fifth successive quarter of growth recorded according to the latest survey from the Society of Chartered Surveyors Ireland (SCSI).
The value of inducements, such as rent-free periods, also continued to fall for the third successive quarter. However, lease length also continued to shorten, a trend which began in the second quarter of 2010.
SCSI vice-president Roland O'Connell says that demand is due to the combination of a flight to quality among existing occupiers as well as increased recruitment by high-tech companies such as newcomers Facebook and Linked-in.
Trends in the retail sector are more mixed according to the survey which acts as a gauge of sentiment among SCSI members. Sales and lettings of retail units continued to decline in volume for the second successive quarter following a period of stagnation in the second half of 2010.
While tenant inducements continued to decline, vacant stock increased and where new leases were signed, the periods were reduced. Nevertheless one agent suggested that rents have bottomed out at the very prime side of the retail market such as larger units in Grafton Street.
The industrial sector suffered a setback in Q2 with a fall in transaction activity after bucking the trend in the first quarter. Vacant stock increased again and leases continue to shorten in the industrial sector.
Inducements to occupiers were also down for the third consecutive quarter.
Agents acknowledged that development land continues to be the weakest-performing. Declining transactions and enquiries continued in Q2.
Respondents were also unanimous in their view that a government ban on upward-only rent reviews was having a negative impact and creating further uncertainty in the market.
"This uncertainty, combined with the dearth of credit available from financial institutions, will do little to ease the paralysis which the commercial property market is experiencing. The general view is that this needs to be dealt with urgently to remove the uncertainty for both tenants and landlords," the SCSI survey says.
Another SCSI survey shows that construction tender prices appear to have stabilised.
After falling 33pc from their 2007 peak, they were unchanged in the first half of 2011 -- the first time they were unchanged for two successive half years.
Prices are now back to levels last seen in 1998 when the Index was first published.