Boards.ie uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Click here to find out more x
Post Reply  
 
 
Thread Tools Search this Thread
15-08-2020, 12:33   #2116
Bass Reeves
Registered User
 
Join Date: Nov 2015
Posts: 7,046
Quote:
Originally Posted by PropQueries View Post
But wouldn't that mean that all the small businesses (e.g. shops, restaurants, pubs etc.) that are reliant on the workers in these office spaces see a reduction in 'potential' customers in the order of 30% - 50%.

If the footfall on Grafton Street fell permanently by 30% - 50%, I'm sure the retailers on that street would start to demand significant reductions in rent.

This would impact rental yields and then the capital values of those premises. That then impacts on the ability of those landlords to meet any loan repayments on those properties or if it's a pension fund, it's ability to meet their obligations to their pension fund holders.
Yes it may during the day, but workers working from home may start earlier in the morning finish earlier and go go into town early in the next evening to mix socially. Workers may have more spending power due to less travel expenses. There day in the office may be only 3-5 hours with a few hours shopping in town. To every action there is an equal and opposite reaction.
Neither did I say there would not be reductions in rent yields but rather that the reduction in space for commercial activities in the city center may not be as large as many think

Last edited by Bass Reeves; 15-08-2020 at 12:41.
Bass Reeves is online now  
Advertisement
15-08-2020, 12:41   #2117
PropQueries
Registered User
 
PropQueries's Avatar
 
Join Date: Jul 2020
Posts: 419
Quote:
Originally Posted by JJJackal View Post
The converse is that the restaurants where people live (who now wfh) will see increase demand so prices of premises will increase peripherally while decreasing centrally
That's true. But I think a lot of the discretionary spend in the City is from a spur of the moment decision e.g. after work drinks, lunch with the team etc. In relation to retailers, the main benefit of shopping in a city is a lot of local shops in close proximity to each other so you can browse many different products fairly quickly and choose which one to buy.

If more people are WFH, they're more likely to order any products they require through Amazon etc. than increase their spending in their local e.g. handbag or perfume shop.
PropQueries is online now  
(2) thanks from:
15-08-2020, 13:50   #2118
Bass Reeves
Registered User
 
Join Date: Nov 2015
Posts: 7,046
Quote:
Originally Posted by PropQueries View Post
That's true. But I think a lot of the discretionary spend in the City is from a spur of the moment decision e.g. after work drinks, lunch with the team etc. In relation to retailers, the main benefit of shopping in a city is a lot of local shops in close proximity to each other so you can browse many different products fairly quickly and choose which one to buy.

If more people are WFH, they're more likely to order any products they require through Amazon etc. than increase their spending in their local e.g. handbag or perfume shop.
Clothes etc tend to be more browse and spend, white goods tend to be more focused on value and Amazon is more electronic and small good's

Part of the attraction of clothes online is the ability with established shops to return free if charge to the local store. Therefore you can order 3-4 items of different sizes or similar types and drop back the ones you do not want. These shops live with the return costs With complete online shopping return costs are a factor that have to be allowed for by the consumer.

WFH will require more living space. A young couple if both are working from home will no longer be happy with a one bed apartment with a single dining/living space. Dermot Bannon's open plan designs will be a thing of the past. If you are on the phone to a customer or manager, your partner/flatmate having a chat and going through the gory details with a workmate on the phone about the last night out will be an issue.

More space equals more costs. The high flying legal eagle may be happy to work from home 1-2 days a week but he still want his office when he goes in. No hotdesking for him
Bass Reeves is online now  
Thanks from:
15-08-2020, 14:11   #2119
An Ri rua
Registered User
 
An Ri rua's Avatar
 
Join Date: Jul 2005
Posts: 2,726
Quote:
Originally Posted by Bass Reeves View Post
Clothes etc tend to be more browse and spend, white goods tend to be more focused on value and Amazon is more electronic and small good's

Part of the attraction of clothes online is the ability with established shops to return free if charge to the local store. Therefore you can order 3-4 items of different sizes or similar types and drop back the ones you do not want. These shops live with the return costs With complete online shopping return costs are a factor that have to be allowed for by the consumer.

WFH will require more living space. A young couple if both are working from home will no longer be happy with a one bed apartment with a single dining/living space. Dermot Bannon's open plan designs will be a thing of the past. If you are on the phone to a customer or manager, your partner/flatmate having a chat and going through the gory details with a workmate on the phone about the last night out will be an issue.

More space equals more costs. The high flying legal eagle may be happy to work from home 1-2 days a week but he still want his office when he goes in. No hotdesking for him
GDPR is also an issue. Anyone handling sensitive data needs the space that its held in fully documented. Hotdesking would be likely a no-no.
An Ri rua is offline  
Thanks from:
15-08-2020, 14:24   #2120
PropQueries
Registered User
 
PropQueries's Avatar
 
Join Date: Jul 2020
Posts: 419
Quote:
Originally Posted by Bass Reeves View Post
Clothes etc tend to be more browse and spend, white goods tend to be more focused on value and Amazon is more electronic and small good's

Part of the attraction of clothes online is the ability with established shops to return free if charge to the local store. Therefore you can order 3-4 items of different sizes or similar types and drop back the ones you do not want. These shops live with the return costs With complete online shopping return costs are a factor that have to be allowed for by the consumer.

WFH will require more living space. A young couple if both are working from home will no longer be happy with a one bed apartment with a single dining/living space. Dermot Bannon's open plan designs will be a thing of the past. If you are on the phone to a customer or manager, your partner/flatmate having a chat and going through the gory details with a workmate on the phone about the last night out will be an issue.

More space equals more costs. The high flying legal eagle may be happy to work from home 1-2 days a week but he still want his office when he goes in. No hotdesking for him
All good points. But even if there's only a 10% permanent drop in the daily footfall, that impacts the value of all properties in the city, office, retail etc.

More importantly, for my perspective anyway, the banks and pension funds seem to have significant funds invested in this space and I'm just concerned for my pension, as I don't see suburban properties making up the shortfall.

Even if suburban properties increased in value, the pension funds probably don't have the equity in their existing city centre property portfolios to gear up and invest in them. Instead of investing in more property, they're more likely to be taking losses in the near future as they will probably need to offload their prime properties to meet redemption requests etc.

If all pension funds are in a similar situation and the banks are not in a position to lend, who will take them? Maybe the so-called vulture funds, but I read that many of them are already looking to get out of this space. Even if they did enter, the pension funds and banks will most likely take a significant hit either way.

For example, back in January, Aviva stopped investors from taking money out of their Irish property funds with a "combined value of €940 million", and that was pre-covid:

https://www.irishtimes.com/business/...20money%20back
PropQueries is online now  
(2) thanks from:
Advertisement
15-08-2020, 14:27   #2121
Bass Reeves
Registered User
 
Join Date: Nov 2015
Posts: 7,046
Quote:
Originally Posted by An Ri rua View Post
GDPR is also an issue. Anyone handling sensitive data needs the space that its held in fully documented. Hotdesking would be likely a no-no.
It's a bit like when computers were first being put into offices, all the talk was the end of printers and paper documents. Now at a presentation everybody gets a hard copy of the presentation. 30 years ago everybody bought a notebook and biro to take down details
Bass Reeves is online now  
15-08-2020, 15:16   #2122
Bass Reeves
Registered User
 
Join Date: Nov 2015
Posts: 7,046
Quote:
Originally Posted by PropQueries View Post
All good points. But even if there's only a 10% permanent drop in the daily footfall, that impacts the value of all properties in the city, office, retail etc.

More importantly, for my perspective anyway, the banks and pension funds seem to have significant funds invested in this space and I'm just concerned for my pension, as I don't see suburban properties making up the shortfall.

Even if suburban properties increased in value, the pension funds probably don't have the equity in their existing city centre property portfolios to gear up and invest in them. Instead of investing in more property, they're more likely to be taking losses in the near future as they will probably need to offload their prime properties to meet redemption requests etc.

If all pension funds are in a similar situation and the banks are not in a position to lend, who will take them? Maybe the so-called vulture funds, but I read that many of them are already looking to get out of this space. Even if they did enter, the pension funds and banks will most likely take a significant hit either way.

For example, back in January, Aviva stopped investors from taking money out of their Irish property funds with a "combined value of €940 million", and that was pre-covid:

https://www.irishtimes.com/business/...20money%20back
The reason IL and other property funds closed withdrawal's was a prices were quite strong and assets were leaverged withdrawal's was going to the encompass more leaverging to pay for withdrawals.

This was one of the reasons for the 2007-12 property busts there was a lot of highly leaverged funds which when pressure came on had to be hand d back to the banks.Everything is cyclical to am an extent. If outflows are exceedingly inflows I. Property you have to take action, it much the same with in any fund.

Now may be a bad time to change the nature of you.pension fundost factors are factored in already
Bass Reeves is online now  
15-08-2020, 15:32   #2123
mcsean2163
Registered User
 
mcsean2163's Avatar
 
Join Date: Apr 2008
Posts: 263
I've been hoping to find commercial space in Dublin for an office/ workshop and there's little or nothing available. Does anyone know when all this cheap office space is going to hit the market that McWilliams is talking about?

https://www.irishtimes.com/opinion/d...29527?mode=amp
mcsean2163 is offline  
15-08-2020, 15:45   #2124
PropQueries
Registered User
 
PropQueries's Avatar
 
Join Date: Jul 2020
Posts: 419
Quote:
Originally Posted by Bass Reeves View Post
The reason IL and other property funds closed withdrawal's was a prices were quite strong and assets were leaverged withdrawal's was going to the encompass more leaverging to pay for withdrawals.

This was one of the reasons for the 2007-12 property busts there was a lot of highly leaverged funds which when pressure came on had to be hand d back to the banks.Everything is cyclical to am an extent. If outflows are exceedingly inflows I. Property you have to take action, it much the same with in any fund.

Now may be a bad time to change the nature of you.pension fundost factors are factored in already
Good point. It probably is a bad time to change the nature of a pension fund.

But, if this is a fundamental shift in the nature of the economy and WFH does become a significant component of the workplace in the near to medium term, would it be like sticking with the investment in the horse and cart company just as Henry Ford is revving up production of the Model T?

Is there more to lose by sticking with a pension fund that has a significant percentage of its investments in such an asset class or getting out now and taking that loss instead of a potential wipeout in the medium term?
PropQueries is online now  
Advertisement
15-08-2020, 15:53   #2125
The Belly
Registered User
 
Join Date: Jan 2005
Posts: 519
Quote:
Originally Posted by PropQueries View Post
Good point. It probably is a bad time to change the nature of a pension fund.

But, if this is a fundamental shift in the nature of the economy and WFH does become a significant component of the workplace in the near to medium term, would it be like sticking with the investment in the horse and cart company just as Henry Ford is revving up production of the Model T?

Is there more to lose by sticking with a pension fund that has a significant percentage of its investments in such an asset class or getting out now and taking that loss instead of a potential wipeout in the medium term?
ILAC irish life canada life what ever the call themselves theses days are brutal fund managers. Sh1t returns high charges with a smile.

Taking your losses now if history is anything to go by means you avoid the worst of it. Look at Irish equity funds back in the day there is some pension funds who are still not back to where they were in 2007.
The Belly is offline  
15-08-2020, 16:31   #2126
PropQueries
Registered User
 
PropQueries's Avatar
 
Join Date: Jul 2020
Posts: 419
Quote:
Originally Posted by mcsean2163 View Post
I've been hoping to find commercial space in Dublin for an office/ workshop and there's little or nothing available. Does anyone know when all this cheap office space is going to hit the market that McWilliams is talking about?

https://www.irishtimes.com/opinion/d...29527?mode=amp
Try down the IFSC. There is nothing but small empty retail / office spaces there for the past 10 years. I think the problem is that if the owner is highly leveraged or is using that property as security for another loan, they can't reduce the asking rent as then they would crystallize a loss on the value of their investment property.

My understanding is that most investment properties are valued at their rental yield (real or perceived). If they reduce the rent, the value of the investment property automatically drops and they may be breaking loan covenants etc. It's kind of a pretend and extend game played by the banks and pension funds. They would rather keep them empty and pretend the value on their books is the real world value.

I'm not sure they can keep this game going forever, kind of like all those empty apartments in Ballsbridge with an asking rent of €4,000 a month but mostly empty. Maybe this Covid thing will force them to open up about the true value of their investment properties?
PropQueries is online now  
15-08-2020, 16:33   #2127
The Belly
Registered User
 
Join Date: Jan 2005
Posts: 519
Quote:
Originally Posted by PropQueries View Post
Try down the IFSC. There is nothing but small empty retail / office spaces there for the past 10 years. I think the problem is that if the owner is highly leveraged or is using that property as security for another loan, they can't reduce the asking rent as then they would crystallize a loss on the value of their investment property.

My understanding is that most investment properties are valued at their rental yield (real or perceived). If they reduce the rent, the value of the investment property automatically drops and they may be breaking loan covenants etc. It's kind of a pretend and extend game played by the banks and pension funds. They would rather keep them empty and pretend the value on their books is the real world value.

I'm not sure they can keep this game going forever, kind of like all those empty apartments in Ballsbridge with an asking rent of €4,000 a month but mostly empty. Maybe this Covid thing will force them to open up about the true value of their investment properties?
in a nutshell fake till you make it. Look at the value of companies. In the past it was earning now is gone hairwire.
The Belly is offline  
15-08-2020, 16:36   #2128
JJJackal
Registered User
 
JJJackal's Avatar
 
Join Date: Feb 2019
Posts: 942
Quote:
Originally Posted by PropQueries View Post
Try down the IFSC. There is nothing but small empty retail / office spaces there for the past 10 years. I think the problem is that if the owner is highly leveraged or is using that property as security for another loan, they can't reduce the asking rent as then they would crystallize a loss on the value of their investment property.

My understanding is that most investment properties are valued at their rental yield (real or perceived). If they reduce the rent, the value of the investment property automatically drops and they may be breaking loan covenants etc. It's kind of a pretend and extend game played by the banks and pension funds. They would rather keep them empty and pretend the value on their books is the real world value.

I'm not sure they can keep this game going forever, kind of like all those empty apartments in Ballsbridge with an asking rent of €4,000 a month but mostly empty. Maybe this Covid thing will force them to open up about the true value of their investment properties?
There are currently 22 apartments in Ballsbridge on daft for 4000 plus.

Some are like 15,000 which makes me think that there is something very different about some of them! There wont me alot of demand for some of these even at the best of times
JJJackal is offline  
15-08-2020, 16:37   #2129
smellyoldboot
Registered User
 
smellyoldboot's Avatar
 
Join Date: Aug 2020
Posts: 402
Saving the shekels right now and can't wait for the arse to fall out of the end of this market. There's only so long FFG can artificially prop it up
smellyoldboot is offline  
(2) thanks from:
15-08-2020, 16:38   #2130
The Belly
Registered User
 
Join Date: Jan 2005
Posts: 519
Quote:
Originally Posted by JJJackal View Post
There are currently 22 apartments in Ballsbridge on daft for 4000 plus.

Some are like 15,000 which makes me think that there is something very different about some of them! There wont me alot of demand for some of these even at the best of times
Saw one for 10k a rental. Its been there for maybe 10 months. Over time we may see the day when its 5k
The Belly is offline  
Post Reply

Quick Reply
Message:
Remove Text Formatting
Bold
Italic
Underline

Insert Image
Wrap [QUOTE] tags around selected text
 
Decrease Size
Increase Size
Please sign up or log in to join the discussion

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Share Tweet