Approaching The End Of Another Good Year For Ireland's Commercial Property Market

Dublin, November 1st, 2018 - Commercial property specialists CBRE, whom Myles Clarke is due to join as Managing Director later this month, today released their final bi-monthly report for 2018 focusing on the latest trends and transactions in all sectors of the Irish commercial property market.

Marie Hunt, Executive Director and Head of Research, CBRE Ireland
Despite the turmoil being experienced on financial markets and an escalation in Brexit negotiations in recent weeks, the Autumn season in the Irish commercial property market was every bit as busy as had been anticipated with strong momentum witnessed across all sectors during the months of September and October. With Halloween now behind us and Christmas looming, the focus will shift over the coming weeks to getting transactions in all sectors completed before year-end, with very little new product likely to be launched to the market during the next two-month period. A busy two months are now in prospect as another good year for the Irish commercial property market draws to a close.
Marie Hunt, Executive Director and Head of Research, CBRE Ireland

Key Takeaways


  • Office take-up in Dublin reached 56,415m2 in Q3. Although somewhat less than the strong volumes of take-up recorded in Q1 and Q2, it brings total take-up in the first nine months of 2018 to an impressive 220,217m2 and masks the very strong volume of stock reserved and due to complete in either Q4 or early 2019.

  • More than one third of the office stock let in Dublin in the year to the end of September comprise pre-lettings.

  • There are several sizeable transactions currently in legals and the focus for the coming months will be on getting as many of these as possible signed before year-end.As we approach 2019, the volume of outstanding requirements for office accommodation in the capital remains particularly healthy at over 323,000m2 with demand emanating from a range of different sectors. Although several of these requirements are from technology occupiers, it is interesting to note that the State also have several active requirements for modern office accommodation at present, including 3 relatively large mandates.

  • More than 12% of leasing activity in the Dublin office market in the first nine months of 2018 emanated from flexible occupiers as the demand for co-working and flex space continues to increase in line with the trend being experienced in other jurisdictions. This concept is proving particularly attractive in Dublin where many occupiers need flexibility until they are clear on their longer-term size requirements. While this is having relatively no impact on larger transactions, which are continuing regardless, it is creating additional competitive pressure for landlords who are marketing small to medium sized floors and buildings.

Industrial & Logistics

  • Following a relatively slow start to the year, a significant number of transactions completed in the industrial & logistics sector in Dublin during the third quarter of 2018, bringing total take-up in the first nine months of the year to more than 210,000m2. This is 24% higher than the volume of activity achieved in the first nine months of 2017 demonstrating the impact that new supply is now starting to have in this sector.

  • There has been a notable increase in demand for new buildings in recent months although the extent to which this is attributable to an intensification of Brexit negotiations remains to be seen. Several buildings are now being pre-let prior to practical completion such is the demand for new stock.

  • The average vacancy rate in 25 of the most modern industrial and logistics parks in Dublin is currently 8.23%.

  • Prime rents in the industrial sector remain stable at €106 per square metre at present but are expected to reach approximately €110 per square metre by year-end. This in turn is piquing the interest of investors who continue to seek out good industrial investment opportunities on the back of the rental growth potential. As a result, there has been some hardening of yields in this sector over recent months.


  • As we approach year-end, the Irish retail market continues to buck the European trend with Ireland’s strong economic backdrop supportive of the retail sector of the economy, as is evident from measures such as retail sales activity, footfall and consumer sentiment.

  • The retail property market also continues to perform well with strong appetite for any well-located schemes or retail units that are brought to the market with particularly strong demand from the food and beverage sector. Encouragingly, demand for good secondary and suburban locations has been improving of late with CBRE’s latest high street vacancy counts around the country having seen occupancy improving in several locations over the last 12-month period.

  • Activity in the retail property market is likely to slow a little over the next two months as retailers understandably focus attention on their core business during the traditional Christmas trading period. Irish retailers are expecting healthy volumes of sales activity over the coming weeks with last month’s Budget expected to provide an additional boost to consumer spending in the run up to the festive season and January sales.


  • Total returns in the Irish commercial property market increased by 6.9% in the first three quarters of 2018, according to MSCI - an impressive return, which continues to encourage a range of domestic and international investors to invest in what is regarded as a stable core market.

  • Total spend for the first nine months of 2018 surprised on the upside, boosted by a number of forward funding transactions including several in the emerging Build-to-Rent sector. In total, more than €2.67 billion was invested in Irish investment assets in the nine-month period and with several large transactions in legals at present, it is looking increasingly likely that total spend for the year as a whole could exceed €3.5 billion.

  • Demand for core assets remains very healthy and these assets continue to be well bid. However, unless assets are competitively priced and/or there are obvious opportunities to add value, the liquidity for secondary assets is somewhat weaker by comparison. Yields in all sectors remain relatively stable at this juncture although there is potential for some further hardening in due course for prime offices, prime multifamily/Build-to-Rent, prime industrial and hotels.


  • There was a notable increase in both the volume and value of development land traded in the Irish market during 2018, a trend that has been clearly evident over recent months as some large development transactions completed and some sizeable assets were brought to the market. In total, 105 development land transactions totalling almost €940 million between them signed in the nine months to the end of September, which is considerably more than the €748 million annual average spent on development land in Ireland each year since 2014.

  • With the end of 2018 in clear sight at this point, there are a number of development sites and projects being actively marketed (both on and off market), many of which are now unlikely to complete until early 2019.

  • Although the new Land Development Agency is unlikely to deliver significant housing output in the short to medium term, the concept is sound and is to be welcomed as part of a multi-faceted response to Ireland’s housing crisis.

  • CBRE continue to see strong appetite for sites capable of supporting the development of Build-to-Rent and co-living concepts with particularly strong demand for sites in established residential locations with good transport links. The pool of buyers has deepened quite a bit in recent months with traditional house builders that are predominantly developing residential stock to sell also quite active in the market, which is encouraging.


  • Only 12 hotel transactions totalling almost €263 million between them and one hotel investment sale totalling €17.5 million transacted in the Irish market during the first nine months of 2018. However, the recent completion of Project Trident (Tifco portfolio), which included 17 trading hotels and some development assets, as well as Tetrarch’s acquisition of the former Deerpark Hotel in Howth in north County Dublin and the investment sale and leaseback of the Premier Suites aparthotel in Ballsbridge, Dublin 4, have provided a very significant boost to transactional activity in the last couple of weeks.

  • The hotel industry was understandably disappointed with the Government’s decision in Budget 2019 to increase the 9% rate of VAT that has applied to the hospitality sector since 2011 to its previous rate of 13.5% from 1st Jan 2019. It remains to be seen to what extent this move will be negative for hotel performance over the next 12 months although it is clear that hotels in provincial locations will be more exposed.

  • Development activity continues at pace in the hotel sector with several schemes at various stages of the planning and development process and numerous new entrants continuing to look at the Dublin market in particular.

Dublin Pubs

  • The Dublin pub market has been relatively quiet during 2018 with only 17 properties totalling more than €30.2 million between them having traded in the first nine months of 2018. However, although the quantum of pubs changing hands is low, the average sales price has increased to €1.776 million, which is encouraging and reflects the improved trading conditions being experienced by the trade. A number of the pubs that have been changing hands of late have been sold for alternative use/redevelopment.


  • September and October saw continued momentum in activity in the commercial property market in Cork with several transactions having completed and strong interest in evidence for the various assets launched for sale during the Autumn season. Activity has been encouraging in the office occupier market in particular, buoyed by recent job announcements from occupiers such as Voxpro.

  • The Project Lee portfolio loan sale, which included some prime Cork assets, has now gone sale agreed for a reported €300 million. Meanwhile, contracts have now exchanged on the sale and leaseback of the Quest office building at City Gate in Mahon for more than €21 million while the Webworks office building in Eglington Street, Cork has recently gone sale agreed.

  • Considering the dearth of new housing supply in the Cork market, there has been very strong appetite for a prime residential site at Maryborough Ridge in Douglas that CBRE recently launched for sale by way of a license on behalf of NAMA, guiding in excess of €20 million. The site, comprises two lots - the first with planning for 198 residential units extending to 20.64 acres and the second extending to 24.04 acres. The land is due to go to best bids on November 8th and looks certain to be the biggest land sale in Cork in 2018.

About CBRE

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2017 revenue). The company has more than 80,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

CBRE U.C., (CBRE Ireland) registered in Ireland, no. 316570. PSRA Licence No. 001528 is the country’s largest commercial real estate services company with offices in Dublin and Cork. Currently employing over 150 employees, we work with occupiers, investors and developers of office, industrial and logistics, retail, hotel and healthcare property, providing strategic advice and execution for property sales and leasing; tenant representation, corporate services; property and project management; appraisal and valuation; development services; investment management and debt advisory; business rates and compulsory purchase and research and consulting. Please visit our website at www.cbre.ie