Some landlords giving tenants 30pc rent cuts
Commercial property tenants are receiving rent reductions of up to 30pc, according to a new survey by the Society of Chartered Surveyors Ireland (SCSI).
Where tenants could provide evidence that they needed a rent reduction, landlords were willing to engage, although it depended on the type.
As many as 98pc of respondents reported that private domestic landlords are providing rent reductions, while 61pc reported that international pension funds are not granting rent reductions.
However, the SCSI said that the main issue affecting the market was the continued uncertainty caused by the proposed introduction of legislation to ban upward-only rent reviews in existing leases.
It said that this uncertainty is severely impacting Ireland's ability to attract foreign direct investment and pointed to figures that suggest that investment levels have dropped to about €180m so far in 2011 compared to over €3bn in 2006.
Roland O'Connell, vice president of the SCSI, said that "the significant fall-off in investment in the commercial market has a ripple effect on the wider economy. The country potentially loses out on foreign direct investment which can stimulate growth, create jobs and provide tax revenue to the exchequer".
In the retail sector, 41pc of respondents reported that tenants received a rent reduction of between 20 and 29pc in 2011, where 48pc of respondents reported this last year.
An increasing number of office tenants appear to be achieving sizeable rent reductions, with 34pc of respondents reporting that office tenants received rent reductions of between 20 and 29pc in 2011 -- up from 31pc in 2010.
"In the industrial sector 25pc of tenants received a rent reduction of between 20 and 29pc in 2011 -- up from 22pc in 2010. In the hospitality sector, 27pc of pub/restaurant tenants received a rent reduction of between 20 and 29pc in 2011 -- down from 49pc in 2010.
While 88pc of respondents reported that domestic corporate investors were granting rent reductions, only 50pc reported that domestic pension funds are being as amenable to tenants.
Mr O'Connell also urged the Government to make a prompt decision on the ban on upward-only rent reviews.
"Publishing the legislation will provide a level of certainty and confidence to both tenants and landlords so that they know what to expect and can make business decisions for the future, which is in everyone's interests," he said.
The survey is based on the responses of over 110 firms around the country.
About 60pc of respondents to the survey act on behalf of both tenants and landlords
Upward-only rent reviews have already been banned in new leases since February 28 last year.