Reading the latest Irish commercial property outlook report from property services powerhouse CB Richard Ellis (CBRE), two language-related matters suggest themselves; firstly the report describes itself as bi-monthly which always confuses because it can mean “twice per month” or “every two months” and secondly, there’s a need to find a substitute word for “challenging” which is generally over-used in Ireland at present. CBRE’s report is issued every two months and it continues to describe the outlook in many sectors as “challenging”. However as usual, it does foresee some light on the dismal Irish commercial property landscape.
Office take up, that is, the amount of space contracted in new rental agreements, inDublin in 2011 is projected to be a respectable 1.4m square feet, which is good news for those who benefit from transactions. This new activity is however mainly driven by tenants vacating more expensive accommodation, though there are some new tenants arriving on the Irish scene and some existing tenants are expanding – it is particularly encouraging to see growth being driven by new technology companies like Apple, HP, LinkedIn, Facebook and AOL; shame that we have apparently lost Twitter to London.
Retail property rental transactions continue apace with a fair smattering of new entrants on the Irish market, and expansion of some existing retailers, all of this however set against a drop in retail spending, which suggests there will some struggling retailers out there. CBRE sees the next budget as a factor in keeping the retail sector depressed but is optimistic about landlords setting favourable terms to attract business. As far as I can tell there hasn’t been a single euro change in rents in the past six months, that is, if you compare the rents showing here with the CBRE report in March 2011.
Industrial transactions confirm there is still life remaining in that sector also. CBRE claims headline prime rents have stabilised at €65 psm in recent months but that there is still downward pressure on secondary sites.
Investment activity is moribund and CBRE attributes this in no small part to the Government dilly-dallying with its announcements on Upward Only Rent Reviews, on which the latest I hear is that we might get the heads of a bill in the next couple of weeks, with a full bill in October 2011. Whilst getting the bill through a Dail with a massive majority should not be an issue for the Government, legal challenges here and inEurope might be. CBRE also cites lack of finance as a factor undermining the sector.
CBRE expects supply of development land to the market to improve in coming months, and it further claims that there is decent demand for high-profile sites, though as with other sectors, negotiations and legals are prolonging transactions more than is usual. Agricultural land is fetching up to €20,000 an acre. CBRE does refer to an interesting transaction in Limerick and says that a loan in respect of the partly-developed Parkway Valley shopping centre site (pictured here though the cranes are no longer onsite) has been acquired by a “Northern Ireland investor” for €103m. Elsewhere today, the Irish Examiner names the investor as Suneil Sharma, who had at one time been involved in the development of the Opera shopping centre in Limerick city. The enterprising Suneil has fingers in a large number of pies, yet still finds time to contribute to his role on the Northern Ireland Policing Board. Apparently the loan was originally held by a Liam Carroll concern, Alocin but has now reportedly been sold by NAMA.
The hotel sector itself is seemingly lifting itself off the floor with higher occupancy rates and increased revenue though as with so many things in life, CBRE sees the outlook for the sector as “challenging”. From a property perspective, CBRE expects a number of hotels to come on the market in the autumn, and it concludes with that great old property mantra: “there will be buyers if the prices are realistic”
There is also a review of the UK and Belfast markets.
UPDATE: 7th September, 2011. Jack Fagan at the Irish Times is back from his holidays and produces a clear-as-mud article about Suneil Sharma’s dealings in Limerick. There is no mention whatsoever about NAMA. It seems that it was National Irish Bank (local unit of Danske Bank) which controlled the loan for the site and it seems that the loan (apparently with a nominal value of €100m) has been sold for €30m. Or maybe the underlying site has. And it’s not clear if the €30m bought the undeveloped site AND the already built retail park next door or just the retail park. Given the “expert” view in the article that the site (again unclear if that is the undeveloped site AND the already built retail park next door) is only worth €15-20m, there might be questions about overpayment. The article is clearer on Suneil’s intentions, in the sense he appears to have given a statement saying that he is examining options, and the article makes reference to Suneil’s past involvement with Opera but also another retail project on Childers Road in Limerick that was eventually sold to Alanis.
UPDATE (1): 7th September, 2011. The BBC reports that Suneil (pictured here) had been putting the Parkway deal together for 18 months and that Suneil is now an ex-member of the police ombudsman service.
NAMA Wine Lake 