LAST year marked a period of substantial trading in the commercial/investment property market. The driving factor was the general well-being of the economy and continued business confidence. Total investment for the year was £250 million, similar to the level achieved in 1994.

The only barrier to higher levels of spending was the lack of property for sale. With finance costs at historically low levels (base rates of 6.5 to 7 per cent) and real evidence of rental growth (5 to 7 per cent), market demand was strong. Institutional and private buyers snapped up quality opportunities as they became available.

Record yields were set in both the industrial and retail markets. With better income potential, investors were willing to accept lower initial returns. Increased economic activity is fuelling greater demand for space This in turn, is driving rental growth.

A barometer of the confidence in the market was shown in the willingness of investors to accept historically low initial returns in two of the fastest growing sectors. One industrial transaction reflected a base yield of 8.5 per cent while a trade on a retail investment on Graft on Street was completed at 4.9 per cent.

Further strong economic growth is expected this year. Domestic demand should be buoyant, with exports growing A widening trade surplus, coupled with the flow of EU funds, will ensure a healthy current account surplus of 3.5 per cent of GDP. Continued growth (7 per cent) and low interest rates will fuel investor demand. An inflation rate below 3 per cent will enhance the real value of market growth.

Given that the economic environment will be right, existing investor demand will continue to grow. So, can we identify where this demand will he satisfied and profile the main players? Well, as the saying goes, "God loves a tryer".

Having decided on commercial property as an investment medium, what alternatives are there? The investment media for 1996 will be offices, industrial retail, car-parks and leisure.

New office schemes will be in short supply, so demand will focus on older buildings. Occupier demand is now firmly established. The take-up of space has eroded the previous over-supply. However, rental levels are not quite high enough to fuel speculative development. The volume of transactions may well be limited to investors focusing on existing buildings with well-established tenants.

Funds will be available for refurbished office properties that cater for the demand for improved specification.

New office schemes in less traditional locations will generate interest. Out-of-town offices with good parking, services and transport access should appeal to all investors. Trading will also be evident in office schemes that have the added bonus of tax incentives. East Point Business Park and the remaining offices in Tallaght Town Centre should be monitored carefully.

With almost one million square feet of retail space due to open in 1996, this sector should generate a lot of activity. New shopping centres are being built on the back of the expectation of rental growth. Likewise, investor funds will he attracted to retail for the same reason. Out-of-town shopping centres are now firmly on the "shopping list" of major investors. Developments with tax breaks, such as the Jervis Street shopping centre which is under construction, will have a ready-made investment market.

It does not take any crystal ball gazing to know that Henry Street and Grafton Street opportunities will be snapped up if they become available. However, it is worth keeping an eye on the growing demand for stand alone, out-of-town stores. UK multiples are actively seeking sites for food and non-food units of varying sizes. Pre-letting agreements to well-known UK traders may prove irresistible.

The industrial market, traditionally the poor sister of investment, is now firmly on the "buy" list. This can be attributed to the sustained growth in distributions and manufacturing. With rental growth potential in all areas of the market, demand will focus on old estates and new developments where available. The growth in inward investment and indigenous company start-ups will generate investment deals in IDA-backed schemes like Swords Business Park in Dublin.

High-bay warehousing will be a more commonly heard phrase during 1996. New technology with modern racking methods has created an awareness of spatial capacity. The high bays of up to 60 feet will generally be situated close to motorways and over 100,000 square feet in size. Investment in high-bay warehouses in the UK is commonplace. Yields in the UK, which started at 8.5 per cent, have hardened quickly to 6.5 per cent and rental growth has been strong.

The peace dividend on this island cannot he underestimated. There was a 15 per cent growth in tourism revenue in 1995 over the previous year. The growth in demand is spurring development and should generate new investment opportunities. The capital allowances available on hotel investment should give a further lift to a growing market. The designation of specific holiday towns for investment in tourist accommodation will be watched with interest over the coming year.

Domestic demand for higher quality leisure facilities will create a new area for investment interest. One of the fastest growing markets in the UK and Europe is institutional and private investment in leisure centres.

Attention should also be paid to the expansion in multi-storey car-park development. Transport policy initiatives such as the DTI, are encouraging this trend by reducing the number of on-street car-parking spaces in urban areas. The provision of capital allowances on the construction of multi-storey car-parks in the 1995 Finance Act has made investment in car-parks more attractive.

So, who will be the main players during 1996? Property investment funds and pension funds will continue to be major performers this year All of the funds have firmly set out their stalls as purchasers rather than vendors of product. Irish Life is a prime exam plc. Having carried out a programme of disposal of older stock during 1995, it is now seeking new investment opportunities.

The funds have a preference for new schemes. There is intense competition for deals with letting agreements in place and a general shortage of new developments (except for retail). 1996 may be the year when pre-funding developments on a speculative basis returns.

Private buyers have a growing influence on the market. The availability of low-cost finance, coupled with the value of property in comparison to alternative investment media, is underpinning demand. Individuals now have the ability to buy much larger lot sizes than before. Strength of tenant rather than building age is the primary consideration of most private investors. While these investors controlled 20 per cent of the market in 1995, this proportion grow in the coming year.

Acquisitions where management and refurbishment is required will become more commonplace. A recent example of this was the sale of the former ICC headquarters on Harcourt Street, which will be refurbished before a letting campaign commences. Property companies, while few in number, will also have a growing influence. Where the funds may take a more conservative approach, some investors, such as Green Property, will seek out portfolios requiring more active management and expertise.

Most of these opportunities are currently held by pension funds., These companies may become the only vehicle where smaller private investors can access prime commercial property, albeit indirectly.

Tax partnerships and banks with capacity for tax breaks will contribute significantly to the investment spend during 1996. Larger tax deals, outside the reach of private individuals, will be soaked up by partnerships and banks with significant tax exposure. In effect, these players look on their entry to the market as a financial rather than a property transaction. Therefore, security of income is critical to their decision to invest.

Finally, we cannot forget the emerging market of UK and foreign buyers. Judging by the volume of inquiries for opportunities from abroad, tangible investment is expected during the year. However, the high rate of stamp duty and the associated illiquidity, is a cause for concern to foreign investors. It should be for us too.

All things considered, we are confident that the level of investment in 1995 will be exceeded in the coming year.