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PREPARED FOR THE IRISH COMMERCIAL PROPERTY MARKET OVERVIEW Marie Hunt, CBRE June 20 th 2013.

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Presentation on theme: "PREPARED FOR THE IRISH COMMERCIAL PROPERTY MARKET OVERVIEW Marie Hunt, CBRE June 20 th 2013."— Presentation transcript:

1 PREPARED FOR THE IRISH COMMERCIAL PROPERTY MARKET OVERVIEW Marie Hunt, CBRE June 20 th 2013

2 2CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 AGENDA The Occupier Markets The Office Market The Retail Market The Industrial Market The Investment Market The Hotels & Licensed Market The Development Land Market Loan Sales Presentation to PRAI– June 2013

3 3CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 Growth in Dublin Office Stock THE OFFICE MARKET Growth in Dublin Office Stock | SOURCE: CBRE, Q Presentation to PRAI – June 2013

4 4CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 Prime Rents | 56% Peak to Trough Decline THE OFFICE MARKET Prime Dublin Office Rents | Q Q SOURCE: CBRE, Q Presentation to PRAI – June 2013

5 5CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 Take-Up vs. Vacancy THE OFFICE MARKET Dublin Annual Office Take-Up vs. Vacancy | 2004 – Q SOURCE: CBRE, Q Presentation to PRAI – June 2013

6 6CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 City Centre Office Vacancy THE OFFICE MARKET Dublin City CBD Vacancy Rates | Q SOURCE: CBRE, Q Presentation PRAI – June 2013

7 7CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 CBRE PRIME RENT SERIES PeakJune 2013Trending Prime Rent per sq m RETAIL SHOPS Prime High Street Zone A10,0004,500Stable Good Secondary High Street Zone A7,5004,000Stable Prime Provincial High Street4,5003,500Weaker SHOPPING CENTRES Prime Zone A3,9003,000Stable Secondary Zone A2,8002,000Weaker RETAIL WAREHOUSES Prime360215Stable Secondary32080Weaker OFFICES Prime City Centre Dublin Stronger Secondary City Centre Dublin377194Stable Suburban Dublin296172Stable Prime Provincial270135Weaker INDUSTRIAL Prime Dublin13060Stable Secondary Dublin10037Stable Prime Provincial9033Weaker Presentation to PRAI – June 2013

8 8CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 THE OFFICE MARKET Continued activity from existing occupiers and new entrants… Overall level of demand robust…40 transactions signed in Q1… Some rental growth emerging for prime although aggregate relatively stable… Incentives starting to shrink… Some improvement in the availability of funding …. An increase in corporates buying premises… An increase in refurbishment projects and pre-planning discussions although no speculative development anticipated for some time yet… Continued gradual decline in the overall rate of vacancy… Change of planning regime in Dublin Docklands… Increased transparency due to new national database ?…. Presentation to NTMA Presentation to PRAI– June 2013

9 9CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 REGIONAL HIGH STREET VACANCY Presentation to NTMA Presentation to PRAI– June 2013

10 10CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 THE RETAIL MARKET Some improvement in this sector over recent months as consumer confidence starts to stabilise but conditions still challenging… Vacancy levels a concern, particularly in provincial locations… Good demand from existing retailers and new entrants although largely focussed on core locations…. Greater focus on developing multi-channel offerings as online sales escalate… Competition for the best pitches intensifying due to lack of new accommodation coming on stream… Potential for some limited rental growth in key locations although aggregate remaining relatively flat…. Rates now more topical than rents for many retailers… Presentation to NTMA Presentation to PRAI– June 2013

11 11CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 THE INDUSTRIAL MARKET Strong demand from a range of specialist occupiers, particularly for prime buildings… Greater incidence of occupiers purchasing premises, instead of renting… A number of significant land sales in negotiation … No speculative development anticipated other than design & build… Rental values beginning to stabilise… Pricing not the key driver of location decisions… Short lease terms the norm….. Multi-channel retailing boosting the demand for logistics and distribution facilities… Presentation to NTMA Presentation PRAI– June 2013

12 12CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 IRISH INVESTMENT SPEND 2006 – Q Presentation to NTMA Presentation to PRAI– June 2013

13 13CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 INVESTMENT INTO IRELAND 2012 Over 545m of transactions > 1m signed in transactions > 1m Presentation to NTMA Presentation to PRAI – June 2013

14 14CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 ANALYSIS OF IRISH INVESTMENT SPEND Q Presentation to NTMA Presentation to PRAI – June 2013

15 15CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 IRISH TOTAL RETURNS & CAPITAL GROWTH Presentation to PRAI – June 2013

16 16CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 CBRE IRELAND EQUIVALENT YIELD SERIES PeakJune 2013Trending Yield % RETAIL SHOPS Prime High Street Stronger Good Secondary High Street Stronger Prime Provincial High Street Stronger SHOPPING CENTRES Prime Stronger Secondary Stronger RETAIL WAREHOUSES Prime Stronger Secondary Stronger OFFICES Prime City Centre Dublin Stronger Secondary City Centre Dublin Stronger Suburban Dublin Stronger Prime Provincial Stronger INDUSTRIAL Prime Dublin Stronger Secondary Dublin Stronger Prime Provincial Stable Prime Yields refer to an equivalent yield for a prime (well specified, well-located and rack-rented) property let to a strong tenant(s), on a lease with 10 years unexpired and open market rent reviews (upwards or downwards) Prime Provincial refers to Cork, Galway, Limerick and Waterford only. Presentation PRAI – June 2013

17 17CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 THE INVESTMENT MARKET Continued strong international appetite for prime investment opportunities and portfolios… Domestic investors dominant but mainly for secondary and provincial opportunities… Primary attraction is re-pricing from peak and the relative attractiveness of yields… IPD series moving back into positive territory… New sources of funding from overseas boosting liquidity… Continued polarisation … Potential for prime yields to harden further due to the weight of money… Potential for secondary yields to soften further… More loan sales activity anticipated … Presentation to NTMA Presentation to PRAI – June 2013

18 18CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 IRISH HOTEL SPEND Presentation to NTMA Presentation to PRAI – June 2013

19 19CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 INVESTMENT IN HOTELS IRELAND 2012 Over 146m of hotel sales in 2012 in 24 transactions Presentation to NTMA Presentation to PRAI – June 2013

20 20CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 THE HOTELS & LICENSED MARKET More hotel and pub properties coming to the market… Demand from international buyers primarily focussed on Dublin… Domestic buyers focussed on provincial opportunities… An increase in pub properties going into receivership and ultimately being released for sale… Increase in refurbishment projects … 2 new hotels opening in Dublin in 2013 but several hotel projects planned… Demand focussed on properties in Dublin 1,2 and 4 and profitable hotels in Cork, Galway and Kilkenny… Improvement in funding, both from domestic banks and overseas… The Gathering 2013…. Presentation to PRAI – June 2013

21 21CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 DEVELOPMENT LAND SALES 2008 – Q Presentation to PRAI – June 2013

22 22CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 THE DEVELOPMENT LAND MARKET Continued volume of both greenfield and brownfield land coming to the market … An increase in owner-occupier demand … Demand primarily local although some international investors buying sites… Demand particularly strong for sites priced below 500,000… An increase in the number of license and joint venture transactions Strongest demand for: Sites with planning for up to 50 houses in Dublin Sites in good locations that suit discount retailers Partially-complete residential developments in good locations Sites in Dublin city centre that could accommodate student housing Strategic sites that meet the requirements of corporate occupiers wanting to develop bespoke facilities Presentation to NTMA Presentation to PRAI – June 2013

23 23CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 COMPLETED LOAN SALES IRELAND 2012 VendorDateNameBuyerLoan mDiscountLocation LloydsJun 2012PrinceKennedy Wilson & Deutsche Bank %Ireland GE CapitalAug 2012Pepper Home Loans %Ireland AIBOct 2012KildareLone Star %Ireland (90%) & UK (10%) LloydsNov 2012PittsburghCarVal %Ireland LloydsNov 2012LaneApollo1, %Ireland Presentation to PRAI – June 2013

24 24CBRE ANALYSIS | Office Availability & Vacancy Rates | May GLOBAL LOAN SALES COMPLETED 37% of 9.79bn (Original Loan Value) in 2012 comprised Irish assets Approximately 836 million paid for Irish Loans in 2012 Presentation to NTMA Presentation to PRAI – June 2013

25 25CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 LOAN SALES IRELAND 2013 VendorDateNameBuyerLoan mDiscountLocation NAMAMay 2013AspenStarwood Capital/Catalyst Capital/Key Capital Consortium (80%) & NAMA (20%) 800 mc.75%Ireland NAMA2013Club Lloyds2013? NAMA/IBRC2013Delta ? Presentation to PRAI – June 2013

26 Stages of a Property Market Cycle Source | Homer Hoyt – 100 Years of Land Values in Chicago

27 27CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013 QUESTIONS? Marie Hunt Executive Director, CBRE Tel Presentation to NTMA Presentation to PRAI – June 2013


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