The Irish Times are reporting a story concerning the level of vacant commercial buildings across the country for end of June 2012 based on figures published today by Geodirectory (the address database company owned by An Post and Ordnance Survey). The figures give the first insight into the distribution of vacant commercial units across the country outside of Dublin (a couple of the large property companies provide information on Dublin vacancy). As such, the figures are to be welcomed, although care is needed in interpreting them.
Geodirectory report that the number of vacant commercial buildings is 11 percent: 23,834 commercial units were recorded as vacant at the end of June out of a total stock of 226,622. The highest number of vacant units was recorded in Dublin where 5,851 of 48,760 premises are empty (some 12 percent). Carlow, Donegal, Dublin, Galway, Leitrim, Mayo, Roscommon and Sligo have vacancy rates above 11 per cent, with Leitrim and Sligo both having 14 percent.
Two things to note. 11 percent is still a high rate. It should be 5-6%. We can try and put a positive spin on this and say 9 out of every 10 commercial units is occupied, but 11 percent is nevertheless an oversupply.
Second, a very large proportion of the vacant commercial space was built in the last years of the boom and it consists of large-scale retail and office units. There is a substantial difference between the number of units vacant and the size of space that is vacant. For example, although 11 percent of units in Dublin are vacant, over 20% of office space is vacant (some 700,000+ sqm) (see our posts here and here for more info). In some parts of Dublin the vacancy by space is well over 40%. One way to look at this – imagine that there are ten units on a high street. Nine of them are 1000 sqm in size and one is 5000 sqm. If the larger unit is vacant then the vacancy rate per unit is 10 percent, the vacancy rate by unit size is 35 percent. In other words, one cannot simply look at the absolute number of vacant units, rather we also need to consider the type and size of the units that are vacant.
Either way, whilst some analysts will interpret this data positively, and there will be some who will use it as an argument to start building commercial property again, I would be a lot more circumspect. The data highlights that we have an oversupply of commercial units and whilst it is useful to know the number of units vacant, we need to contextualize this information in relation to size of those units and how much vacant space there actually is. It would also be useful to get a break down by type of commercial property (office, retail, industrial, etc) by area and its status/quality (e.g. new, vacated, in need of refurb, derelict, etc) to provide a fuller picture.