Headline commercial rents down 48 per cent since 2007

THE ONGOING improvement in Ireland’s cost competitiveness has had a significant effect on commercial rents, according to a new study published today by estate agents Lisney.

The long-running Rental Indices has found that since the height of the property market towards the end of 2007, Lisney’s composite index of headline commercial rents has declined by 48.06 per cent. In the 12 months to the end of June, the index was down by 6.75 per cent compared to a decline of 27.06 per cent in the same period last year.

The agency says that while it was thought that rents were almost at the bottom of the cycle in the first three months of this year, they detected a slight increase in the pace of decline in the second quarter. The composite index fell by 1.77 per cent in Q2 compared to 0.55 in Q1 and 1.04 per cent in Q4 of 2010.

The indices also shows that the composite index of headline retail rents has fallen by 44.12 per cent since the slippage in 2007. With some recent lettings on Dublins Grafton Street, the index continued to track a fall in Q2 but at a significantly slower pace than the preceding quarters (0.93 per cent compared to 3.57 per cent in Q1 and 2.61 per cent in the last quarter of 2010). This element of the index is down 51.36 per cent since the property collapse. Henry Street continues to perform better, down 38.46 per cent over the same period.

Shopping centres on Dublin’s M50 have been the best performing retail sector since the onset of the downturn, with the index back 28.86 per cent from the latter half of 2007.

In the Dublin office market, the composite index of headline rents is now 54.88 per cent less than at the market peak. The indications in the early months of this year were that the rents had stabilised but Q2 brought some further falls with the overall index declining by 4.29 per cent. This was made up of falls in the city centre (down 5.12 per cent) and west suburbs (-2.38 per cent) indices.

Rents on prime office buildings in the city centre came under pressure again, despite remaining static for the previous nine months. On an annual basis the index illustrated a decline of 10.49 per cent and a peak to trough fall of 56.64 per cent.