Higher energy costs are to blame for commercial vacancy rates in the Republic reaching their highest level in almost a decade, according to a new report.
The GeoView Commercial Vacancy Report, prepared by EY, found commercial vacancy rates increased in 15 out of 26 counties in the 12 months to June, with a total of 29,241 vacant commercial units recorded across the State.
The data capture part of the recovery from the Covid-19 pandemic, the winding down of pandemic-related Government supports, and spiralling inflation over recent months.
The report found that a modest decline in the overall commercial building stock was accompanied by an increase in the stock of vacant properties. This led to an increase in the commercial vacancy rate to 13.9 per cent over the past year.
Vacancy rates are the highest they have been since the report first came out in 2013 though they are up only marginally on last year.
The report attributed the increase to a number of factors which are creating a challenging environment for all businesses.
“The difficult period for many businesses during Covid combined with the heightened energy and other input costs, as a result of the escalation in inflation over recent months and the Russian war in Ukraine, have further exacerbated the economic challenges,” it said.
“The tight labour market and wage inflation as well as increased wage expectations are creating further pressure points, while a sustained and gradual rise in interest rates over the coming months to dampen inflation is likely to further impact the cost of doing business.”
A total of 16 counties had a vacancy rate equal to or greater than the national average of 13.9 per cent, with a prominent east-west divide again evident. Counties along the western seaboard recorded the highest rates.
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Sligo retained the number one position as the county with the highest vacancy rate. Galway and Donegal replaced Roscommon and Leitrim with the second and third highest vacancy rates, each registering 17.2 per cent.
Notably, Dublin recorded an increase of 0.5 percentage points over the year, with the commercial vacancy rate in the capital rising to 12.6 per cent. Meath (9.9 per cent), Wexford (10.6 per cent) and Kerry (11.7 per cent) had the lowest rates.
Businesses in the services sector account for 49.2 per cent of the total commercial units. Accommodation and food is the key subsector in services, occupying 29.1 per cent of the services total.
The five counties with the highest concentration of accommodation and food services units were Kerry (24.3 per cent), Clare (20.6 per cent), Donegal (19.1 per cent), Leitrim (19 per cent), Mayo (17.8 per cent) and Galway (17.7 per cent).
The report noted these counties have a high dependency on the tourism industry. “The recovery in tourism post-Covid may over time support these businesses, although the rising costs of doing business may delay any recovery,” it said.
Retail and wholesale remained the second largest sector occupying 22.3 per cent. Health was the third highest sector, representing 9.4 per cent or 14,759 of the total units.
Industrial activities comprised 5.1 per cent of the total units, while construction, education, financial and insurance and public administration represented less than 5 per cent each of the total number of commercial units.
