Look out­side the big four cities for re­gen­er­a­tion

The Irish Times - Business - - BUSINESS COMMERCIAL PROPERTY - Conor Whe­lan Conor Whe­lan is man­ag­ing part­ner with QRE

Which sec­tors of the mar­ket will be most ac­tive next year?

As wit­nessed in 2018, we ex­pect the pri­vate rented (PRS) and build-to-rent sec­tors to con­tinue to grow in 2019. We also ex­pect the of­fice mar­ket to con­tinue to per­form on an even keel, with steady take-up and sta­ble rents and in­vest­ment yields in the re­spec­tive mar­kets and sub­mar­kets. Pre-lets and for­ward fund­ing will con­tinue to be a fac­tor of the mar­ket.

The in­dus­trial and lo­gis­tics sec­tor is likely to see more spec­u­la­tive devel­op­ment to sup­port in­creas­ing de­mand, cul­mi­nat­ing in stronger rents and fur­ther yield com­pres­sion. We also an­tic­i­pate fur­ther growth in the re­search and devel­op­ment sec­tor.

Have rents and yields peaked across the var­i­ous as­set classes?

Based on our ex­pe­ri­ence deal­ing with buyers over the last quar­ter of 2018, many feel there is now lit­tle value-add op­por­tu­ni­ties in the mar­ket, par­tic­u­larly within Dublin.

Mar­ket ex­pe­ri­ence in some re­cent high-pro­file as­set sales may sug­gest a slight ad­just­ment to guide prices is re­quired in Dublin. This would stim­u­late in­vestor in­ter­est, deepen the po­ten­tial buyer pool, and gen­er­ate com­pet­i­tive bid­ding.

Where are the best in­vest­ment op­por­tu­ni­ties at this stage?

This de­pends on the in­vestor. Be­sides PRS we see good growth po­ten­tial in the in­dus­trial mar­ket in the short to medium term. Prime city of­fices will of­fer steady long-term in­come and com­pet­i­tive yields to in­sti­tu­tional in­vestors. Non-in­sti­tu­tional in­vestors will look to Geor­gian and small­er­scale of­fice prod­uct.

We also feel that there is fur­ther growth po­ten­tial in Dublin 8, as well as well-lo­cated sub­ur­ban of­fice prod­uct. Out­side the big four cities, there is a gov­ern­men­tal man­date to re­gen­er­ate lo­ca­tions such as Water­ford, Sligo, Car­low, Kilkenny and Wick­low. These lo­ca­tions re­quire pur­pose-built ac­com­mo­da­tion for in­ter­na­tional oc­cu­piers.

One thing to watch out for in 2019?

There is in­creas­ing dis­cus­sion about re­tail and the ef­fects of on­line. How­ever, we an­tic­i­pate that re­tail­ers will adapt to chang­ing con­sumer needs, such as en­hanced in-store ex­pe­ri­ence and click-and-col­lect fa­cil­i­ties. At this point the neg­a­tiv­ity is mainly stem­ming from the UK, but we are still see­ing de­mand from house­hold names for well-lo­cated city fringe and neigh­bour­hood lo­ca­tions.

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