The only certainty that seems to have prevailed through the commercial property market for the whole of 2008 has been uncertainty. From the experienced players to the new breed of market analysts, all seem to be looking at the murky waters waiting to see if there is clear water with a bottom in sight.
Property Partners Maxwell & Heaslip have between them over 100 years of experience in dealing in the Galway Commercial market, and it is most interesting when talking to the people who have seen more in the market than most, Danno Heaslip and Jim Maxwell, that the common thread running through their outlook is that the market will certainly turn, it’s a question of looking for the signs that will make this happen, and when.
Alan Maxwell of Property Partners Maxwell & Heaslip says: “While undoubtedly there has been a fall in commercial property values over the past year, relative to many other investment vehicles, property has fared better than many. Although demand has certainly been quieter, there are always buyers who recognise the long term benefits of the commercial property market. What has been holding investors back has been a combination of the lack of availability of funding through the banking system, and the lack of confidence that the current economic situation has caused.”
When just over a year ago, the amalgamated firm of Property Partners Maxwell & Heaslip was launched nobody expected things to have changed so much in the interim. The ability to be diverse in offering a service in commercial property is something that Property Partners Maxwell & Heaslip can provide. In the course of the past 12 months, they have dealt with several notable transactions including the sale of a high profile licensed premises in the city centre which changed hand for in excess of €4 million, and they are currently dealing with a major hotel management company which is most anxious to make its mark in the Galway market.
In relation to retail rent reviews Alan Maxwell has found an increasing number of rent reviews being determined by way of arbitration due to an inability to agree new rent terms. This is undoubtedly due to increased pressures on both landlords and tenants. Negotiation has always been the preferred method of settling, and with his experienced team, he has found that with determined negotiation, settlements can be agreed, leading to substantial savings on all sides. Office rents have seen a reduced demand and with this oversupply there is much more competition in the market. The introduction of new legislation whereby tenants have the freedom to “contract out” of or - get out of – statutory provisions under the landlord and tenant acts has made for much greater flexibility. “We have found much advice is now being sought by both landlords and tenants in relation to this new provision.
“Much more flexibility on all sides can only be a positive for the entire market” says Alan Maxwell. “Tenants can seek longer and better terms without the fear that they may not have rights, and likewise landlords have greater flexibility.”
The outlook for the coming year is that it may take some time for the huge efforts that are being undertaken globally to kick in, and certainly the outcome of things in Ireland will be hugely influenced by what happens on all sides of the waters around us. Certainly the recapitalisation of the lending institutions, assuming that all the right measures are in place, should open up the door for lending, albeit of a more prudent nature.
Mr Danno Heaslip who this year celebrates 40 years in the commercial property market in Galway states: “In my experience, the market had needed a correction. I have seen the market change over four decades, and while I have no doubt that the Galway commercial property market is fundamentally strong it will be a difficult period for the first half of 2009 with growth to follow. With pension funds and other investments having all been affected by recent events, investors should take a long term view and a diversity of investments including commercial property would over time, return excellent results.”
