Retail vacancy rates in Dublin are at 20%, according to property advisers Colliers Jackson Stops, although it says much of this space is "peripheral" or "off pitch".
The agency also says typical lease lengths have dropped dramatically from 25 years to between 10 and 15 years and retailers are securing options to break the lease after five or 10 years.
Evidence is gradually emerging that property investment yields are beginning to stabilise, according to Michele McGarry, an associate director at the firm who says high-street retail yields now stand at 6.5%, with shopping centres at 8%, prime office buildings at 7.5% and industrial units at 8.5%. Yields are the rents expressed as a percentage of the selling price.
One of the main reasons why businesses fail in Ireland is because of the absurdly high rents combined with the use of upward only rent reviews. Already this year, we have been told by a hight court judge, that "upward only" rent reviews were "highly questionable" in other words, probably illegal. The government have promised to do something ..... but surprise, surprise, have done nothing!
NAMA needs high rents. Therefore it is in the governments interest to make sure that high rents prevail in the commercial sector. The other sector that needs "big rents' are the pension funds that have invested in commercial property portfolio's.
High rents, means higher unemployment and yet more business failures. So, the cycle becomes self fulfilling, in terms of higher and higher vacancy rates.
Businesses should not be able to write down the "losses" sustained by having their business premises unoccupied. They claim these as a loss against profits. This is a major incentive to; (a) Claim big losses on voids. (b) Use these tax breaks to withstand market forces and (c) Use accounting conventions to stop rents falling to their natural market levels. The whole thing stinks of monopoly and anti competitiveness. It is actually enshrined in the way our laws are formulated and interpreted so as to protect the commercial property owning sector and pension funds. There is also an underlying assumption that private businesses are there to be milked. The government must decide if they want unemployment at 500,000 or 550,000 or whether they want people to have a chance of working again.