Commercial property market dips sharply in first half of year

Retail is strongest sector as office market suffers worst six months in over a decade amid rising interest rates and post-pandemic work patterns

Retail parks were a particular draw for investors, with the B&Q retail warehouse in Dublin’s Liffey Valley bought for about €27 million.

Ireland’s commercial property market slowed sharply in the first half of the year, as the value and volume of deals dropped significantly.

The €954 million invested in the sector in the first half of 2023 was down almost 48 per cent when compared with the 10-year average. Only 51 deals took place in the period, down more than a third on the average. The data was revealed in JLL research tracking the investment market.

Retail was the strongest performing sector in the €333 million worth of property deals. Retail parks were a particular draw for investors, with an off-market retail park deal accounting for the second-largest investment in the quarter, at €46 million. The B&Q retail warehouse in Dublin’s Liffey Valley was bought for about €27 million.

The largest investment was a private rented sector investment for €55 million.


Office investments fared much worse, seeing their poorest volumes since the first quarter of 2012. Less than €42 million was invested in three transactions, with a Harcourt Street property accounting for the bulk of that at €34 million.

JLL said the sector was lagging the broader market amid questions over the future performance of such assets. The company predicted a turbulent second half for the office sector as the post-pandemic work environment and high interest rates continue to cause unrest.

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“It has been a difficult first half of the year, particularly for the office sector. Ireland is by no means unique in that regard, with declining transaction volumes in the sector across the globe,” said John Moran, chief executive and head of capital markets at JLL Ireland. “Encouragingly, PRS [the private rented sector] is remaining resilient albeit for smaller lot sizes, and retail has enjoyed its most buoyant period for a number of years.”

The research did point to some more positive signs, including the prospect of the end of interest rate hikes and the move by some businesses to a return to the office long-term.

“The peak of the interest rate hikes is in sight,” said Niall Gargan, head of research at JLL Ireland. “After such a rapid and aggressive period of tightening, it is anticipated that the start of the unwinding cycle could potentially begin in 2024.

“Finally, confidence measures are beginning to bottom out and are also anticipated to improve by 2024. The current trend is positive when looking at key sentiment indicators, and the period ahead looks better than the one behind,” he said.

Ciara O'Brien

Ciara O'Brien

Ciara O'Brien is an Irish Times business and technology journalist