Irish Commercial Property Market to ‘Pause for Breath’ Following Busy First Half to the Year

Dublin, July 1st, 2018 - Commercial property specialists CBRE today released their latest bi-monthly report focusing on the latest trends and transactions in all sectors of the Irish commercial property market as the market takes a pause for breath following a very busy first half to the year.


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Marie Hunt, Executive Director and Head of Research, CBRE Ireland
Activity in each of the occupier markets remained strong throughout the first half of 2018, buoyed to a large degree by continued job creation in the Irish economy. The months of July and August will now see the pace slow a little with the focus shifting towards closing out many of the transactions that are either in legals or in negotiations at present before the next wave of activity commences in Autumn. Prime rents and yields in all sectors remain relatively stable at this juncture although further rental and capital value growth is anticipated in all sectors of the market in the second half of 2018. Considering the strength of both the domestic Irish economy and occupational activity, demand for core real estate investment opportunities in the Irish market remains strong although there has been a notable sectoral shift in investor appetite over recent months with focus on the Build to Rent/PRS sector becoming increasingly evident. Another trend that has become evident over recent months is that an increasing proportion of transactions in the hotel, development and investment sectors are being conducted off-market
Marie Hunt, Executive Director and Head of Research, CBRE Ireland


  • Particularly strong take-up was recorded in the Dublin office market in the first six months of 2018 with take-up in Q2 significantly boosted by the recent acquisition of 22,146m2 of office accommodation at the Boland’s Quay development in the south Docklands of the city. In addition to strong volumes of take-up, a number of significant transactions are currently in negotiations and there are several unfulfilled mandates prevailing, which is encouraging.
  • New research from CBRE shows that Dublin currently ranks 27th in a survey of global office occupancy costs, up from 29th place this time last year.
  • With office rents in the suburbs of Dublin remaining at levels that are at least half that prevailing in the heart of the CBD, there is now tangible evidence of occupiers looking to move to more cost-effective locations such as the suburbs.
  • In addition to a notable increase in lettings to co-working and flexible office providers over the last 12 months, CBRE are increasingly seeing organisations introducing flexible working strategies in an effort to lower costs, improve employee engagement and increase productivity within their existing office buildings.

Industrial & Logistics

  • Underlying volumes of activity in the industrial and logistics property market remain solid at the mid-year point with good levels of take-up recorded in the first half of the year and several new requirements having been enacted in the last couple of months. In addition, a number of large transactions are currently in legals, which will provide a welcome addition to take-up activity in the industrial and logistics sector in the second half of the year.
  • A large proportion of active requirements in the industrial & logistics sector are related to the evolution of e-commerce as service providers look to increase efficiencies in their delivery model to service the needs of online consumers. This has led to increased appetite from logistics providers, couriers and parcel delivery companies. There has also been a notable increase in requirements from the food sector over recent months.
  • In addition to a small number of speculative schemes that are presently under construction in the capital, there is also good momentum in ‘Build-to-Suit’ activity in the Dublin market at present. Appetite for data centre sites is particularly strong although sourcing good sites continues to prove challenging with very little industrial zoned land on the market.


  • While the UK retail sector has been dominated by negative newsflow over recent months, the Irish market is experiencing a wholly different environment in which retail sales, consumer sentiment and footfall have been increasing steadily. Against this backdrop, there has been an increase in activity in the retail property market over recent months.
  • There has been an increase in planning activity over recent months and retailers are encouraged by the prospect of some new stock after many years of undersupply in this sector.
  • Prime retail rents remain stable at the mid-year point with the exception of Dundrum Town Centre, which has seen an increase in Zone A rents over the last number of months to approximately €4,600 per square metre.


  • Following the completion of almost €1 billion of investment transactions in the Irish market in the first quarter of 2018, activity has continued at pace over recent months. Although a somewhat lower investment outturn is anticipated in Q2 2018, there are several sizeable assets being marketed at present which will boost transactional activity further in the third and fourth quarters of 2018. Some further Asian investment is expected to materialise in the second half of the year.
  • Investors from a range of jurisdictions continue to be attracted to real estate investment opportunities in the Irish market, attracted by buoyant economic fundamentals and the relative strength of occupier market activity as well as comparatively attractive pricing.
  • The recent ECB announcement that interest rates in the Eurozone are expected to remain at current levels until at least the middle of 2019 will ensure that the considerable arbitrage between 10 year bonds and real estate yields, which has been so supportive of investor demand for real estate over the last few years, will remain for some time yet. Prime yields in all sectors remain stable at current rates at the mid-year point.
  • CBRE envisage a further shift in the sectoral split of investment spend over the coming months with an increasing proportion of investors seeking ‘alternative’ investment opportunities. PRS/Build to Rent continues to evolve as a mainstream sector of the Irish investment market in its own right. Indeed, according to CBRE, the volume of capital chasing residential investment opportunities in Ireland’s main cities continues to escalate with several investors who heretofore focussed primarily on traditional investment sectors such as offices and retail now also willing to consider investment opportunities in the residential sector. To some degree, this is a diversification play on a sector that is generally less susceptible to cyclical patterns, but investors are also attracted by the attractive yield profile and rental growth prospects in an Irish context. According to CBRE, most of the capital targeting the PRS/Build to Rent sector in the Irish market is looking to invest over a long-time horizon.


  • Activity has been brisk in the development land sector of the market over recent months with strong demand prevailing from both domestic and international bidders. Very little of scale was offered for sale in the development land market in the opening months of the year but there has been a notable increase in the volume of stock (including some sizeable land parcels) coming to the market in recent months. This is welcome considering the supply shortages inherent in many sectors at present, most notably in the housing sector.
  • An increase in the volume of stock being offered for sale will give a welcome boost to transactional activity in the development sector in the second half of the year, with 2018 land sales in Ireland now expected to surpass last year’s volume of approximately €750 million according to CBRE.
  • There has been increased appetite for residential sites of late, helped to some degree by the release earlier this year of revised apartment guidelines, which have provided bidders with more clarity and certainty from a pricing and viability perspective. Planning activity has also increased, with planning permissions up 81% year-on-year in Q1 2018 and a particularly notable increase in applications for apartments. The market is now eagerly awaiting the Minister for Housing’s direction on height and density (expected later this month), which will provide further clarity in pricing development sites.
  • In addition to providing residential units for sale, several bidders are now pricing sites on the basis of providing purpose-built Build to Rent (BTR) stock, purpose-built student accommodation (PBSA) and/or co-living accommodation.


  • Against a backdrop of a strong domestic economy, increased corporate activity, healthy tourist numbers, enhanced connectivity and a recent spell of nice Summer weather, Irish hotels are performing well at present. Tourist numbers and performance measures including, Occupancy, Average Daily Rates (ADR) and RevPAR, are all up year-on-year and the market is on track for a particularly good Summer season.
  • Appetite for hotel properties remains strong. However, with demand for opportunities continuing to outstrip supply, the volume of completed hotel sales in the first half of 2018 has been disappointingly low with only 8 hotel sales totalling more than €214 million having traded in the Irish market in the first six months of the year. The volume of completed sales in the year to date masks considerable activity underway in the background. After several years of deleveraging when hotels were actively traded publicly, a number of Irish hotel properties are now being offered for sale in off-market processes with several such transactions underway at present. Therefore, the volume of hotel sales completed in Ireland in 2018 looks set to comfortably exceed last year’s total of approximately €400 million, despite the low volume traded in the first half of 2018.
  • CBRE continue to see international hotel brands looking for opportunities in the Irish market. The lack of opportunities to acquire existing hotels is resulting in greater development activity from parties prepared to forward fund or pre-let hotels.
  • While there is strong demand for Dublin licensed premises, the volume of pubs traded in the first half of 2018 has been relatively low with only 10 Dublin pubs totalling approximately €17.3 million having changed hands in the first six months of the year.


  • Appetite for investment opportunities in the Cork market remains strong at the mid-year point following a busy couple of months which saw a number of notable transactions completed and several assets formally launched for sale. In addition, there is quite a lot of activity underway off-market, with demand for PRS/Build to Rent and office investment opportunities particularly evident at present. Indeed, there has been good demand for the Citygate building at Mahon in Cork, which is let to Quest and currently being marketed on a sale and leaseback basis guiding €21 million.
  • The 11.35 acre ‘Live at the Marquee’ former Ford distribution site in Cork Docklands has recently gone sale agreed for excess €15 million, having attracted bids from a range of international bidders. We expect that the strength of appetite for this prime Cork site will encourage NAMA to release additional sites for sale in due course.
  • There has also been continued momentum in the office occupier sector over the last few months buoyed by the recent announcement that KPMG will lease 2,788m2 in the new office development planned for 85/86 South Mall. Negotiations are continuing a number of other office leasing mandates which are expected to be finalised in the coming months.
  • Prime rents in the office and industrial sectors in Cork have both risen over recent months with prime office rents in the city now trending at approximately €350 per square metre while prime industrial rents in Cork are currently in the order of €86 per square metre.

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 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