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Published in Commercial Property on 01/07/2019

Strong First Half for Irish Commercial Property Market


CNI Editor reports

CBRE Ireland today released their latest bimonthly property market report for July 2019. According to CBRE, the Irish commercial property market experienced a very busy first half in 2019, with several large occupier and investment transactions having completed and other transactions currently underway or in legals.

According to Marie Hunt, Executive Director & Head of Research at CBRE Ireland“Although Q2 figures have yet to be finalised, for the most part, transactional activity in many sectors of the market is expected to be down quarter-on-quarter in Q2 with several transactions that for whatever reason didn’t complete by June 30th having now fallen into Q3. The second half of the year is therefore likely to account for the lion’s share of transactional activity in many sectors of the Irish commercial property market in 2019. Although, Brexit uncertainty will now carry over into the Autumn, the Irish economic backdrop remains solid, buoyed by continued strong job creation, which in turn bodes well for the commercial property market. Recent guidance on interest rate movements also bodes well considering the very substantial differential between 10-year bonds and real estate yields, which combined with economic, demographic and occupational factors makes a very compelling investment case for Irish real estate”.

With the exception of the retail sector, CBRE say that prime yields in the Irish market remain stable at the mid-year point, and, in some cases, have potential to harden further during the second half of the year. The months of July and August will now be focussed on completing transactions which are currently in negotiations/legals before the traditional Autumn selling season kicks off in earnest in September.


  • Transactional activity in the investment sector will be heavily skewed towards H2 in 2019 with the completion of several ongoing investment transactions having now carried over into the second half of the year. Some assets in the Irish investment market are now being acquired by Asian investors and these transactions typically take longer to syndicate, fund and ultimately complete.
  • Prime yields in the Irish market remain stable at the mid-year point, and, in some cases, have potential to harden further, particularly when recent Government bond rate movements and guidance on interest rate trajectories are taken into consideration. The one exception is the retail sector where some further yield softening has been experienced over recent months in line with the trend being experienced in other European markets. Interestingly, the softening in retail yields has unearthed several new opportunistic bidders who are specifically seeking higher-yielding retail investment opportunities, particularly those that offer stable income streams.
  • Debt terms are relatively competitive at present, which is proving hugely supportive of the sector.


  • With a strong 3.7% year-on-year increase in job creation achieved in the Irish economy in Q1 2019 (much of which comprised office-based employment), activity in Dublin’s office occupier market remains robust at the mid-year point. That said, Q2 take-up in the capital is expected to be somewhat lower than the volume achieved in the first quarter of the year by virtue of the fact that a number of transactions hadn’t closed by June 30th and will now carry over into Q3 as a result.
  • Although there have been few new office requirements announced recently, overall demand, at over 370,000m2, remains elevated with a significant number of active requirements to be fulfilled, including a large KPMG requirement where considerations are ongoing. Interestingly, there has been evidence of increased appetite for offices in regional cities over recent months.
  • From a design perspective, occupiers continue to focus on the provision of working environments that foster collaboration, support new ways of working and help attract and retain top talent.


Industrial & Logistics

  • Demand for modern industrial buildings in strategic locations around the M50 and its main arterial routes continues unabated, led for the most part by requirements from the logistics, Ecommerce, data centre and food & beverage sectors. CBRE say that there has been a notable increase in demand from indigenous occupiers for units extending to less than 1,000m2 in recent months.
  • We continue to see some new speculative developments commencing, which is encouraging considering the scarcity of modern industrial & logistics buildings in highly-sought-after locations. Park Developments Group are due to commence construction next month on 3,717m2 facility at North West Logistics Park while in the south west of the city, buoyed by the strength of appetite for the two high-profile buildings that pre-let prior to practical completion at the Mountpark Baldonnell scheme, CBRE expect to see additional speculative development commencing along the N7 road corridor in due course.  
  • Prime industrial rents remain stable at €106 per square metre (€9.85 per sq. ft) while rents for secondary industrial buildings have increased over recent months in line with the strong volume of demand being experienced in this sector at present.


  • On the back of continued strong job creation, wage inflation and Ireland’s unique demographic profile, consumer spending in Ireland is continuing to perform well in comparison to many other jurisdictions, in particular the UK.
  • Demand for retail premises remains robust although less reliant on the fashion sector with growth in the health & wellbeing, beauty and leisure sectors. Indeed, the distinction between retail and leisure continues to blur. Despite the scarcity of retail stores to satisfy demand in key locations, retailers continue to expect flexible lease terms and retailers are exercising patience to secure specific units that best meet their needs. There are a number of transactions currently in legals which will see some interesting retail announcements being made in the second half of 2019.
  • Construction is progressing well on a number of new retail schemes in the Dublin market. In addition to the planned new Town Centre scheme at Cherrywood in the south suburbs and some other schemes in Dublin city centre, works have now started at the Pembroke District in Dundrum while at Liffey Valley Shopping Centre in the west suburbs, work is underway on the delivery of a new TK Maxx store.



  • Activity in the Build-to-Rent (BTR) sector in Ireland increased further over recent months with considerable off-market activity underway in this sector at present. With very little existing BTR product available to purchase, most transactions (both single asset and portfolio trades) are forward-commit structures although forward funding will become a feature of the Irish market in the second half of 2019.
  • CBRE say that developers intending to create institutionally acceptable Build-to-Rent product need to invest in detailed research at the earliest possible stage of the design process to ensure that schemes are not only viable but also specifically tailored to the local demographic and contain the correct mix of amenities for that catchment area and target market. In addition, the construction pack needs to be of the highest quality with appropriate warranties in place from the outset for both contractors and design teams in order to attract capital and achieve superior pricing.

Development Land

  • There has been increasing evidence of price stabilisation in the development land sector over recent months as developers react to easing house price inflation, affordability and rising build cost inflation. While we continue to see transactional activity being recorded and particularly strong demand for sites guiding up to €5 million, most of the land coming to the market and transacting at present comprises relatively small infill sites, meaning the overall spend on development land is likely to be down year-on-year.
  • In addition to developing out existing schemes, much of the focus in this sector at present is on design, consultancy and planning as developers prepare to lodge the next wave of planning applications and focus on potential rezoning opportunities in forthcoming development plans. As in other sectors of the market, much of the activity in the development land sector at present is occurring off-market.
  • CBRE expect an increase in the volume of land sales by religious orders in the second half of 2019.


  • From an occupier perspective, there has been a discernible increase in enquiries for both office and industrial properties in Cork over recent months.
  • Although supply remains constrained, investor demand for well-located Cork properties is healthy, as evidenced by the strength of appetite for the Half Moon Street mixed-use office and retail development in the city, which has recently gone under offer. The Park Avenue residential portfolio of 62 apartments off the South Douglas Road in Cork, which is guiding €17.5 million is currently being marketed and is expected to generate considerable investor interest.


  • We are now in the midst of the busiest tourist season of the year following an increase of more than 6%, to 2.027 million, of overseas visitors to Ireland in Q1 2019. According to CBRE, this bodes well for the hotel sector of the property market, where demand remains high and is likely to increase further as a result of new reforms to regulate short-term tourism-type lettings in Rent Pressure Zones, which came into effect on July 1st, 2019.
  • A rise in the number of hotel rooms coming on stream has had a stabilising impact on various performance measures such as Average Room Rate (ARR) and Revenue Per Available Room (RevPar) over recent months, which is welcome in terms of competitiveness. From a transactional viewpoint, demand continues to outstrip supply, particularly for hotels in Dublin city centre. However, hotel sales in the first half of 2019 are not representative of underlying activity with several large transactions currently at various stages of negotiations and legals and now not due to complete until H2.
  • New hotels that have opened in the capital recently include the 146-bed Hendrick Hotel in Smithfield, Dublin 7 and Marriott’s 202-bed Aloft Hotel in Blackpitts, Dublin 8. Meanwhile, the 300-bed Marlin hotel is due to open at Beaux Lane East in Dublin 2 in the coming weeks. From a planning perspective, permission was recently granted by An Bord Pleanala for a 141-bed hotel at Moore Lane in Dublin 1 and for a 185-bed hotel at Vicar Street in Dublin 8.

Dublin Pubs

  • Following a sluggish first quarter in which only four Dublin pubs formally changed hands, there has been considerable activity recorded, both on and off market, in the sector of late with several pub sales having gone sale agreed or signed in the last few months, fuelled by very strong trading conditions and the improved availability of funding.