THE COMMERCIAL property sector is taking a battering because of the turmoil in the money markets and the increasing fears of a recession.
The London-based Investment Property Databank (IPD) has confirmed that the Irish market has moved into negative territory, falling 2.3 per cent in Q1 2008.
This decline was less than the fall of 2.7 per cent in Q1 2008 recorded last month by Jones Lang LaSalle. The IPD findings mark the end of 23 straight quarters of positive results and will prompt investors and developers to examine what effects an economic downturn will have on the occupier markets in years ahead.
The Dublin city office market shows no sign of faltering with a long list of domestic and overseas companies looking for new HQ buildings. Despite the serious slippage in bank share prices, Bank of Ireland, Anglo Irish Bank and AIB are all planning to move to large new premises.
Bank of Ireland is to lease both a back office of 55,740sq m (600,000sq ft) and a front office HQ of about half that size. AIB Capital Markets is to take up to 37,160sq m (400,000sq ft) on the north city quays close to where Anglo Irish Bank will be renting 20,438sq m (220,000sq ft). State Street Bank is to lease 15,793sq m (170,000sq ft) on Liam Carroll's site at Sir John Rogerson's Quay while Cisco Bank has a request out for 9,290sq m (100,000sq ft).
Even more importantly, KPMG is looking for an initial HQ of 23,225sq m (250,000sq ft) with the option of growing into about 37,160sq m (400,000sq ft).
Another accountancy firm Deloitte Touche is the latest to seek a new HQ with a floor area of 16,722-20,438sq m (180,000 to 220,000sq ft).
The retail market is already experiencing tougher trading conditions because of a marked fall off in consumer spending. Some of the recently opened provincial shopping centres appear to be worse affected by the slowdown. There are also indications that some of the multiples may not be prepared to hang around if new centres fail to pull in the shoppers.
Also badly hit is the investment market with turnover down by 42 per cent in the first quarter to €52.5 million. With bank funding extremely tight, there is still over €600 million worth of commercial properties on the market but, according to Jones Lang LaSalle, much of them are "either of poor quality and/or overpriced".
The agency also suggests that the slowdown in investment activity stems from the fact that many properties did not offer good value.
