"Retail rental market now close to collapse"

independent.ie/business/commercial-property/retail-rental-market-now-close-to-collapse-1897898.html

independent.ie/business/commercial-property/retail-rental-market-now-close-to-collapse-1897898.html
That CHQ place in the IFSC is always practically empty any time I have been there.The amount of empty retail space is staggering. Not just shopping centres,but units in towns and ground floors of half empty apartment buildings.

My favourite bits

Deliberately ignorant rather than dangerously ignorant, I fear.

Exactly. Brian Lenihan knows what’s going on but is ploughing ahead anyway.What was that he said about the rental yields and calling the “bottom”?
Meanwhile there is still a huge level of denial and an unacceptance of reality if recent posts to this site are anything to go by.

How many more job losses is this likely to mean?

Does anybody see a pattern here? These morons have esentially legislated that commercial rents can only go up. (A reflection of the ideological belief that property can only go up in value). They then base their NAMA calculations on the excellent returns from commercial rentals.

King Canute has been re-incarnated as Brian Lenihan

Keeping the rent levels artificially high keeps yields artificially high and high yields are being trotted out as an indication that NAMA can work.

More GUBU from FF.

Blue Horseshoe

But we have that high yield deal on Grafton Street; don’t these people see the high yield? whats wrong with them?

:nin

No doubt the IFSC “Model” will prove staggeringly successful in Ballymun when the place is finished… :smiley:

I presume we`ll be using the Zoe/Bill Shipsey abacus to calculate the Rent Roll… :open_mouth:

I don’t see any indication that this is true.

He’s consistently followed a curve which is 12-18 months behind reality and I don’t think this is any different. NAMA is based on figuring out how much the banks need and then inventing a cock-and-bull story to justify it all. I really don’t think he’s put any thought at all into whether the “long term economic value” is accurate or not.

Thing is though King Canute knew he couldn’t stop the tide. He just wanted to prove to his people that he wasn’t all powerful. As for Lenihan, well that’s a different story all together.

Always interesting to note the difference in attitude toward business owners who suggest that they may refuse to honour rental contracts with vilification of the average homeowner who may have the temerity to suggest something similar when it comes to payment of a mortgage or a lease…

Indeed would such a communal move on the part of these entrepreneurs equate in any way with the actions of unions in seeking better conditions for their members? Or is that just crazy talk?

I’m guessing the government adherence to upward-only contracts might have something to do with not wanting to further impair bank balance sheets. That may happen ultimately anyway. They might even be acting according to principle here (!): honour your contracts. Personally, I can’t see why the law can’t be changed for FUTURE leases, even if the old ones stay the same. Anyway, I’m not an expert on this - just thinking out loud.

When you read stuff like this and then the go ahead for the new 800 million Euro shopping centre at Ballymun you know the loonies have taken over the asylum. XX

thepropertypin.com/viewtopic.php?f=4&t=25170&hilit=Ballymun

Say it with me now…

There is NO SUCH THING as Long Term Economic Value.
It is a meaningless term.

Things are worth what they are worth.

-Rd

I’d disagree with that. If that were true there would be no basis for saying property is overvalued. In 2006 property was simply worth what it was worth.

The government has hijacked a reasonable sounding term (long term value) and made it something it different - “it’s worth whatever we need it to be worth”.

We may not be able to precisely define long term value but we do know property in ghost estates is effectively zero while city centre apartments are 100k or so. “Good” property in “good” areas of Dublin will probably be around 300k.

If such a thing as LTEV exists -how would you calaculate the value of the hole that is the Chicago ‘Spire’ given the oversupply of condos in Chicago and a stagnant market and allowing for the fact that all the ‘earnest’ money --for allegedly 30 per cent of the units - will shortly have to be returned.

If it exists as a concept there has to be a plausible method of calculation

Well you mentioned some of the factors yourself just now in relation to the Chicago spire.

Not all calculations are going to be necessarily precise (particularly long term ones) but you don’t necessarily need a lot of precision.

I mentioned city centre apartments already - their long term value would most likely be a factor of rental yield. How much of a yield you would need depends on interest rates and possible tax changes. How much rent you’ll get depends on future earnings and supply.

The inputs are themselves complex with ranges of values and assorted risks. I’m sure they’re all mathematically definable if an economist wants to write a paper on it but I wouldn’t have the skillset to produce an equation for it - only to produce approximates (interest rates will likely go up necessitating high yields + high probability of property taxes in next 10 years + declining after tax incomes + huge supply of city centre apartments = low values for those apartments).

Of course the “long term value” is itself priced into current prices which is why property tends to get snapped up as it falls through different price barriers. Different people have different ideas about long term values, just as different people have different ideas about current values.

Quite so, but any discussion of such a concept -supposing for a moment it is nothing more than a ‘sky-hook’ is worth discussing only because it is central to what is posited as the NAMA solution - given that the only calculator given by Lenihan relates to yeilds and is utterly discrediited by the actual evidence in respect of yields. That means the only rationale offered to date for this monstrous gamble has no basis in any reality.

He is inviting us to take all our future earnings - put them in hock and jump blindfold into something deeper than the Chicago hole. There is nothing to justify Lenihan’s use of the term LTEV other than a commitment - to bring about a return to the model that landed us here — and a blind faith that it will be vindicated - but informed by all the prejudices of an elite that destabilised our economy and no reason for us to believe --it is for any other reason - than to salvage their own position and start up the carousel all over again

That sounds like great speech.

But r u going to do anything about it?

Sure and what that means is that the long term value posited by Lenihan is completely wrong, not that long term value as a concept doesn’t exist or that it’s completely beyond the wit of man to guess at.

As I mentioned earlier they took a concept and made it mean what they need it to mean. If the long term value really was what they’re proposing then the scheme wouldn’t be terrible - but in that scenario you’d have to question why it would be necessary in the first place.

As ever for this government though they’ll tell a lie rather than the truth.