Impressive First Half Performance For Irish Commercial Real Estate


Up to €1 billion of investment transactions in play at present

Expectations of some further price sharpening over the coming months

Industrial sector produced best rental growth in the first six months

Larger sites and land portfolios expected to be offered for sale in the second half of the year

Up to €250 million of hotel sales expected in Ireland in 2017

Dublin, July 1st 2017 - Commercial property specialists CBRE today released their July bi-monthly report focusing on recent trends and transactions in all sectors of the Irish commercial property market at the mid-year point. According to the report, the first half of 2017 has been very busy albeit a ‘different kind of busy’ compared to the phenomenal performance of the commercial real estate market between 2014 and 2016. Investor demand remains strong, encouraged by activity in each of the various occupier markets, to the extent that CBRE expect to see some price sharpening for prime investment assets over the coming months. According to CBRE, the volume of transactional activity in some sectors such as hotels and investment is down year-on-year due to the smaller lot sizes being offered for sale compared to the large assets and portfolios that traded in recent years.

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Marie Hunt, Executive Director and Head of Research, CBRE Ireland
Despite somewhat of a slow start to the year, the first half of 2017 overall has been very busy and there is currently a large volume of deals underway in all sectors of the commercial property market as well as several assets being prepared for sale. This bodes well for an even better second half performance although year-end totals will invariably depend on the volume of transactions that sign by year-end. Despite continued uncertainty around Brexit, it is encouraging that activity has continued at pace in all sectors regardless. Aside from Brexit uncertainty, the scarcity of housing in the Dublin market remains one of the biggest issues facing the market, and indeed the Government at this juncture. I would imagine therefore that efforts to increase housing supply are likely to be a core focus for the new Minister for Housing over the coming months.
Marie Hunt, Executive Director and Head of Research, CBRE Ireland


  • A robust 50,000m2 of office leasing transactions was signed in Dublin in the first quarter of the year in 40 individual transactions. While numbers for Q2 have yet to be finalised, office take-up in the second quarter of the year is expected to be considerably higher than in Q1, resulting in a very healthy first half in terms of office take-up in the capital.

  • There have been a number of significant lettings in Dublin office buildings that are still under construction over recent months, demonstrating that occupiers are more comfortable committing to schemes when there is clear visibility on delivery.

  • There has been some softening in demand from new entrants in the first half of 2017 with the majority of the larger office leasing transactions that have signed in the first half of the year comprising expansions and relocations of existing occupiers. Financial services firms, business services and technology firms have been particularly active.

  • In addition to regular take-up activity, UK companies looking for a Dublin presence as a result of Brexit has created an additional layer of demand in the first half of the year.

  • According to CBRE, there are 31 office schemes under construction in Dublin at present, extending to more than 380,000 square metres between them, with more than 30% of this total stock already pre-let. Meanwhile, 44% of the office stock due for completion during 2017 specifically has already been pre-let - a proportion that is going to increase further as other lettings sign over the next couple of months.

  • Meanwhile, in Cork, CBRE research shows that although there are 20 office schemes at various stages of the planning process at present, there are only 3 office schemes physically under construction in the city, of which the only speculative scheme is 13,161m2 at Block A, Navigation Square, which is due for completion in 2019.

  • There has been a notable increase in interest in forward funding opportunities since the beginning of the year and we are likely to see some new forward funding transactions announced over the course of the coming months.

  • Prime office rents in Dublin are stable at €673 per square metre (€62.50 per sq ft.) at the mid-year point. Meanwhile, prime office rents in Cork are in the order of €312 per square metre (€29 per sq. ft.).

Industrial & Logistics

  • Demand for industrial accommodation is very strong at present. However, occupiers in the industrial and logistics sector continue to be frustrated by the scarcity of modern facilities along major road networks in the Dublin region, with take-up remaining constrained as a direct result.

  • Prime rents in the industrial sector have risen 6% in the first half of 2017 and are now in the order of €99.50 per square metre (€9.25 per sq. ft.). Now that rents are close to a point where new development is viable, we expect to see schemes that have a grant of planning permission commencing construction on a speculative basis in due course.

  • Some of the demand for accommodation in the industrial and logistics sector is led by increased demand for last mile delivery as online sales continue to increase and some companies amend location strategies as part of their Brexit planning.


  • In addition to the length of time it is taking to get transactions across the line, the biggest challenge in the retail sector continues to be a scarcity of stores to match volumes of occupier demand for established schemes and prime high street locations.

  • Increased housebuilding as well as strong employment generation has seen demand for bulky goods such as furniture & lighting and electrical goods increase significantly, which in turn has proved positive for many retail parks around the country.

  • Prime Zone A rents on Grafton Street remain stable at €6,300 per square metre at the mid-year point.


  • In addition to the €492 million of investment sales completed in the first quarter of 2017, there is up to €1 billion of investment transactions currently in play and several assets being prepared for sale which suggests a relatively healthy volume of transactional activity will be recorded in 2017, albeit down on the phenomenal volumes of investment achieved during 2015 and 2016 when some sizeable portfolios and large shopping centres changed hands.

  • Although yield compression has run its course in many markets across Europe, there is still potential for yields to compress a little further in the Irish market. Investors remain encouraged by Ireland’s economic backdrop, its’ rental growth potential and the underlying strength of occupier markets. Yields for multifamily residential and student accommodation have already started to harden in line with increased appetite for alternative investments.

  • The biggest challenge facing investors looking to deploy capital in the Cork real estate market is a scarcity of core investment opportunities, with a particular lack of medium to large scale lot sizes. The release for sale of Blackpool Shopping Centre & Retail Park in recent weeks at a guide price of €117 million is the single largest investment offering in Cork so far this year. The opportunity is likely to have national and international rather than local appeal given the sheer scale of the asset and it will be a good test of pricing for core real estate in the city.


  • CBRE say that the scarcity of large sites being offered for sale is frustrating considering the number of investors looking to deploy capital in the Irish market at present.

  • It is encouraging to see an increase in both planning applications and new home completions in the first half of the year, but this is coming off a very low base and if we are to achieve a meaningful improvement in housing delivery and attempt to match underlying volumes of demand for housing, drastic action is now needed.

  • It remains to be seen what will transpire in the Budget but CBRE urge the new Minister for Housing to focus on supply side initiatives (such as a temporary reduction in VAT on new home construction), that will help improve viability and in turn speed up the delivery of much-needed housing in the shortest possible timeframe. In addition to Government’s focus on facilitating supply, the Central Bank need to review whether buyers who aspire to home ownership are in a position to do so on the basis of existing income multiples or whether these need to be reviewed at this juncture.

  • CBRE expect to see greater focus on the release of larger sites or indeed portfolios to the market during the second half of the year. We also expect to see an increase in the number of license deals, joint ventures and forward-funding transactions in this sector over the course of the coming months.


  • Transactional activity in the hotel sector in the first half of 2017 is down year-on-year although momentum is now building after what was a slow start to the year. The relatively low volume of transactions signed in H1 is largely attributable to the aforementioned slow start and the scarcity of large-scale assets being released for sale compared to last year. Having said that, we expect up to €250 million of hotels to trade in the Irish market in 2017.

  • Demand for prime hotel assets remains strong, fuelled by strong performance indicators, particularly in Dublin where hotel availability remains seriously compromised. However, with considerable hotel development activity now underway in the capital, this situation will ultimately improve. According to CBRE research, there are 14 hotel projects under construction in the capital at the mid-year point, which between them will add more than 1,700 new hotel rooms. 10 of the 14 projects are new hotels while 4 are extensions.

  • A number of assets that were offered for sale over recent months, including the Connemara Coast Hotel in Galway; The Knightsbrook Hotel in Trim, Co. Meath and the Athlone Springs Hotel in Athlone, Co. Westmeath, are now at an advanced stage of negotiation and expected to reach conclusion imminently, which will provide a welcome boost to transactional activity in the second half of the year.

  • Only four Dublin pubs traded in the first six months of 2017, totalling just under €5 million between them. However, there are a further 14 pubs at contract signed or sale agreed stage with a combined capital value in the region of €18.5 million. Transactions agreed recently include the sale of Boland’s in Stillorgan, Co. Dublin; the nearby Sandyford House and Meanwhile, an agreement to lease The Vineyard premises in Blanchardstown, Dublin 15 was recently agreed.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), 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 2016 revenue). The company has more than 75,000 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 135 employees, we work with occupiers, investors and developers of office, industrial and logistic, 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