Irish commercial property spend on course to top €4bn by year end

CBRE calls for ‘line in the sand’ on policy to ensure housing and infrastrtucture delivered

With €2.7 billion invested in Irish commercial real estate in the first half of 2021 and a further €1.3 billion likely to be spent by year end, the publication today of agent CBRE’s latest bi-monthly report finds the overall trajectory of the market to be positive notwithstanding the disparity in performance between the various sectors over the course of the Covid-19 pandemic.


Looking at the performance of the office sector following the easing of travel restrictions, CBRE notes that activity has increased discernibly compared to the volume of take-up recorded in the first half of 2021. And while the increase in the incidence of the Delta variant of the coronavirus has delayed some occupiers’ plans, CBRE says it expects employers to bring their personnel back on site in increasing numbers over the coming months, with most leaning towards some form of a hybrid working pattern.

Another outcome of the pandemic has been the growth in the demand for flexible space solutions with many occupiers seeing a bigger role for flexible office accommodation in their portfolios.


Indeed, Chinese social media giant TikTok recently committed to a serviced office agreement for 2,300 desks across a number of WeWork centres while it waits for its new headquarter building at the Sorting Office in Dublin’s south docklands to be ready for occupation.

In terms of traditional office lettings, the market saw a number of notable signings recently including BNP Paribas Bank and US medical devices giant ResMed Inc respective execution of long-term leases of 40,000sq ft and 20,000sq ft at the Termini building in Sandyford, Dublin 18; DLA Piper's agreement for 2,787sq m (30,000sq ft) at 40 Molesworth Street, Dublin 2; the HSE's decision to take 928sq m (9,988sq ft) in Hawthorn House, at Millennium Park in Naas, Co Kildare: ABB's agreement for 619sq m (6,663sq ft) at the Concourse Building in Sandyford, Dublin 18; and the 557sq m (5,995sq ft) taken up by Freenow at 7-12 Baggot Court, Dublin 2.


While the tourism sector took an unprecedented hit as a result of Covid-19, the prospects for the sector are positively reflected in the €190 million in hotel sales conducted in the year to the date and the €200 million of off-market trades under negotiation currently. Looking to the future, CBRE says that many of the hotel opportunities that are due to come to the market in the coming weeks and months are development projects as opposed to trading assets.

Industrial and logistics

The strength of the industrial and logistics sector continued to be displayed throughout the summer, with no let-up in demand from either occupiers or investors. Apart from the numerous outstanding requirements for space, CBRE was instructed recently by Maersk Logistics to acquire between 13,935sq m and 18,580sq m (150,000-200,000 sq ft) of accommodation in the Dublin market. This is expected to be followed shortly by a second requirement for between 55,740sq m and 74,320sq m (600,000-800,000sq ft).


While consumers have yet to return to their pre-pandemic shopping behaviours, CBRE says the improvements that have taken place to date in footfall, consumer confidence and retail expenditure have seen a corresponding improvement in investor interest that it expects to be reflected in completed transactions in the coming months.

The report says retail occupiers have been attracted by increased availability of premises in some of the streets and schemes where they are interested in locating and the ability to negotiate favourable terms in the wake of the pandemic.

The report notes that a number of the stores vacated over the past 18 months have since been relet to new occupiers, with Debenhams being a case in point. Several of its former Irish units have been acquired or leased in recent months with a deal agreed to acquire its former Limerick store for approximately €9 million; The Range due to open in their former store at Manor West Shopping Centre in Tralee, Co. Kerry; Penney's (Primark) due to commence trading in their former store in Tallaght in south Dublin; and Frasers Group due to open their first Irish stores in the former Debenhams stores in Mahon Point in Cork and Whitewater Shopping Centre in Newbridge, Co Kildare.

CBRE says it expects to see further consolidation in the grocery and food and beverage sectors over the coming months with good demand from domestic occupiers in particular.


While the private rented sector market continues to perform strongly with up to €1.5 billion in transactions completed in the first half of this year, an increasing proportion of these sales are being conducted in targeted off-market campaigns.

Considerable due diligence is being undertaken to support these investment decisions CBRE says, as in addition to other regulatory changes introduced over recent months, investors also now have to take into consideration recent Government proposals to link residential rents to inflation as opposed to the previous regime of capping rental growth at 4 per cent in designated Rent Pressure Zones.

CBRE believes the expiration of the Strategic Housing Development (SHD) fast-track planning process at the end of this year will lead to a notable increase in the number of residential planning applications over the coming months.

Development land

Referring to the recent slowdown in the market for development land, CBRE believes this can be attributed to the difficulty in pricing unconsented sites in the absence of detail on future social and affordable allocation requirements and the numerous other policy changes proposed in the Government’s long-promised housing plan.

On this, the report says: “It remains to be seen what all of the various proposals in the ‘Housing for All’ plan will have for the market, albeit it will take some time for any of the policy changes to significantly boost housing delivery, which is the crux of the current housing crisis.

“It will take a considerable time before there is a meaningful increase in housing delivery, particularly if the majority of schemes are refused planning or repeatedly appealed in line with recent experience. This in turn will exert continued upward pressure on both house prices and rental values for the foreseeable future.”


The most notable trend observed in the healthcare sector over recent months is an increase in appetite for development projects. Many of the operators that aspire to grow their nursing home bed count in the Irish market realise that they will have to become involved in the development of new facilities in addition to the acquisition of existing properties if they want to achieve scale.

But while the outlook for the wider Irish commercial real estate market is a positive one at present, there are risks to be considered and avoided according to the firm’s head of research, Marie Hunt.

She said: “September hopefully marks a new beginning for the Irish economy and all sectors of the Irish property market. Similarly, we now need to draw a line in the sand and ensure consistency on policy to enable the investors, funders and developers that we are relying on to deliver much-needed supply of buildings including both public and private housing of all types and tenures, to deliver without fear of further regulatory changes or government intervention”.

Ronald Quinlan

Ronald Quinlan

Ronald Quinlan is Property Editor of The Irish Times