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Published in Commercial Property on 01/11/2019

CBRE: Another Strong Year for Commercial Property Market


CNI Editor reports

CBRE Ireland has released its final bi-monthly property market report for 2019. According to CBRE, despite heightened Brexit noise over the last two months, activity has been brisk across all sectors of the Irish market and at this juncture, there is good visibility on pipeline for the year ahead.

Budget 2020 increased the rate of stamp duty on ‘non-residential’ property transactions from 6% to 7.5% from midnight on October 8th – a measure which CBRE says will have implications for property values. According to the property consultants, several other property-related measures were announced in Budget 2020, which investors are now digesting to determine specific implications for their property portfolios and investment strategies. The property consultants say that unfortunately, the introduction of unexpected measures by Government has the potential to create reputational risk for Ireland amongst institutional investors.

Another observation from the report is that from a delivery perspective, increases in construction price inflation and the cost of adhering to new Near Zero Energy Building (NZEB) regulations from November 1st has added to viability concerns in several sectors of the market over recent months.

According to Marie Hunt, Executive Director & Head of Research at CBRE Ireland “In our last report in September we commented on the particularly large volume of transactions in legals across all sectors of the commercial property market. Over the course of the last two months, some of these transactions have completed and in turn boosted Q3 transaction volumes. However, with only two months to year-end, there is still a large volume of transactions due to complete in addition to work to adhere to new Budget changes. There will therefore be a flurry of activity over the coming weeks to get transactions completed by year-end although inevitably some transactions will now carry over into 2020.”.



  • According to the most recent Irish investment index from MCSI, total returns in the Irish commercial property market reached 1.3% in Q3 2019 with the sector having achieved a total return of 4.5% in the first nine months of 2019.
  • Returns will be somewhat negatively impacted in Q4 following the recent increase in stamp duty for non-residential trades from 6% to 7.5%, which came into force last month following Budget 2020. At this juncture, investors are taking time to consider the potential impact the recent increase in commercial stamp duty along with other property-related measures announced in the Government’s budget has for their portfolios and investment strategies.
  • The market is on target to achieve very strong spend in 2019 taking into consideration deals signed year-to-date and the volume of transactions in legals at present including some off-market trades. Investment spend in the first nine months of 2019 was almost €3.3 billion which has potential to reach a new record of €5 billion by year-end, depending on what transactions sign before year-end.
  • Prime yields across all sectors remain stable as we approach year-end except for retail yields which have experienced some further softening over recent months.


·       Despite all the noise around Brexit over recent months which may have resulted in some occupiers putting location & expansion decisions on hold, activity in the Dublin office market has continued at pace regardless. More than 192,000 square metres of office take-up was recorded in Dublin in the year to the end of September 2019 according to CBRE. With a further 153,000m2 of offices reserved at the end of Q3, this bodes well for a strong Q4 if these transactions complete before year end. However, legals are proving slow and cumbersome so the likelihood is that some current office leasing transactions may not complete now until Q1 2020.

·       Demand for office accommodation remains elevated with more than half of current demand focussed on city centre locations although we have recently seen increased activity in the suburbs with exactly half of Q3 leasing activity in the capital occurring in suburban locations and the two largest transactions in the quarter located in the south suburbs of the city.

Industrial & Logistics

  • 224,600m2 of transactional activity was signed in the industrial & logistics market in Dublin in the first three quarters of 2019 – up 7% on the same period last year. Several other transactions are currently reserved and in legals, which should boost Q4 take-up in this sector. Meanwhile, best bids have now been received for the Compass industrial portfolio, which was offered to the market recently, guiding €28.5 million.
  • Demand for well-located industrial sites remains strong with several searches ongoing at present from a range of different user types including distribution and data centres.
  • CBRE have seen some increase in prime headline quoting rents in the Dublin industrial market over recent months with prime rents now trending at approximately €110 per square metre (€10.25 per sq. ft.).



  • Although consumer sentiment has understandably been negatively impacted by all the political discussions on Brexit over recent months, the Irish retail market has demonstrated remarkable resilience with the volume of retail sales up year-on-year regardless. Property consultants continue to see good levels of activity with strong demand for new stores in high footfall areas from food & beverage and the athletic leisure & sports sectors.
  • The focus for the next two months will be on getting existing transactions signed as opposed to launching new mandates, with retailers focussing on their core businesses during their busiest two trading months in the run up to Black Friday, Cyber Monday, Christmas and New Year. 


  • For the second quarter running, the volume of spend on Build-to-Rent exceeded offices and other sectors in Q3, accounting for 46% of total investment spend in the Irish market in the year to the end of September. Demand for this sector continues unabated with particularly strong appetite for lot sizes of between €50 and €100 million at present. 
  • Investors are increasingly opting to forward commit to Build-to-Rent schemes in order to secure product in the absence of sufficient standing stock to satisfy investor appetite. However, investors want access to product that is deliverable in the short to medium term as opposed to committing to schemes that are too early in the development or planning process.
  • There is increasing concern about rising build cost inflation, which can have a significant impact on deliverability and ultimately target returns.
  • As we approach year-end, it is clear that there is a good amount of potential Build-to-Rent stock in the planning process. Ensuring that this product is viable and deliverable is now a significant challenge according to CBRE, particularly considering the implication of Budget changes, rising build costs and NZEB regulations which came into force on November 1st. Developers with a contracting arm will undoubtedly be best placed to ensure deliverability.

Development Land

  • More than €800 million of development land transactions completed in Ireland in the first nine months of 2019 in 47 individual transactions with some large transactions signed in Q3 including the site of the former DIT campus at Kevin Street in Dublin 8 for €140 million, boosting spend in the year-to-date.
  • First round bids have now been submitted on the Glass Bottle site in Dublin 4, which was guiding in excess of €125 million, with a preferred bidder likely to be announced in the first quarter of 2020
  • While Budget 2020 is now behind us and the industry broadly welcomed the decision to retain the ‘Help to Buy’ scheme for a further two year period, the market is now anxiously awaiting a decision from the Central Bank later this month on whether there will be any changes to their macroprudential policy, which could have a bearing on the volume of new housing delivered in 2020. New Near Zero Energy Build (NZEB) regulations are in force since November 1st for all new dwellings or extensions/renovations where the surface of the building increases by more than 25%. This will have negative implications for viability at a time when the recent hike in stamp duty and rising build cost inflation are already impacting on viability and pricing.



·       The months of September and October have been relatively quiet in the commercial property market in Cork with very little of scale announced recently, either from an occupier or investment viewpoint.  While there are several sizeable office occupier transactions in negotiations, it remains to be seen which of these will transact in 2019 with some now likely to fall into next year.

·       Development continues at pace on a number of schemes across the city with an ever-increasing number of cranes visible on the Cork skyline. Appetite for prime development land remains steady although there is very little supply being offered to the market at present. Where residential development is underway, it is exclusively for housing with apartment viability in the city remaining severely compromised – a situation that is unlikely to change without some form of Government intervention.



  • 16 hotel sales totalling more than €304 million transacted in the Irish market in the year to the end of September according to CBRE. Demand continues to outstrip supply, particularly for hotels and aparthotel opportunities in Dublin city centre as has been evident from recent sales mandates and operator selection processes.
  • The volume of pent-up demand for prime hotel opportunities and depth of capital looking to deploy is encouraging some vendors to consider bringing their assets to the market. At this juncture, we have visibility on a good pipeline of product due to be launched for sale during the first half of 2020, including some Dublin properties.


  • Investors continue to seek out investment opportunities in the healthcare sector in the Irish market with a notable increase in demand from European funds to deploy capital into this sector of the market during the last 12 months. A French fund has been particularly active of late, having acquired several nursing home properties around the country in the last couple of months alone.
  • Investors appear to be prepared to acquire assets using several different structures, including sale and leaseback where existing operators are remaining in situ and purchasing operational businesses and creating long-term leases to specialist operators in other situations. Many of these transactions are being conducted off-market. In addition, a number of entities are assembling portfolios of nursing home sites with a view to putting institutionally acceptable leases in place and securing funding on this basis.
  • As we approach year end, we expect to see the continued arrival of new European funds looking to deploy and trying to identify routes to unlocking product in the Irish healthcare sector.