Findings highlight a notable improvement in sentiment across occupier and investor demand suggesting a potential stabilisation of the commercial property market. However, fears of international trade tariffs are causing uncertainty.
The key findings:
- Overall capital value and rental expectations for all three commercial property asset types show positive outlook for this year
- Chartered Commercial Surveyors expect prime industrial values and rents to rise by over 3% nationally on average
- Prime office capital values and rents are expected to increase by 1.4% on average
- Prime retail rents are expected to rise by 1.2% and capital values by 1% on average
- 47% of survey participants believe the market is at the bottom of the cycle or in early upturn phase
Thursday February 18 2025: Occupier and investment sentiment in commercial property improved significantly in Q4 2024 and as a result chartered commercial and valuation surveyors are predicting a rise in rents and capital values across all three commercial property asset types this year.
As has been the case in recent years, both prime and secondary industrial properties are anticipated to experience the highest increases in capital and rental values.
The Society of Chartered Surveyors Ireland Commercial Property Review and Outlook Report 2025 predicts that national average capital values for prime industrial will rise by 3.2% while rents will rise by 3.1%.
Chartered commercial and valuation surveyors expect prime office capital values and rents to increase by 1.4% while they believe prime retail capital values will increase by 1% and rental values by 1.2% on average.
Arlene Maguire, Chair of the SCSI Commercial Agency Group welcomed the notable improvement in sentiment across occupier and investor demand.
“The last few years have proved challenging for the commercial property market, but these findings reflect a renewed optimism among chartered commercial surveyors in the sector’s resilience and that is very heartening to see.”
“The improved outlook suggests a potential stabilisation of the market driven by a combination of confidence in Ireland’s economic performance and a recalibration of space usage patterns to meet evolving tenant needs. Lower interest rates have also played a role with 45% of surveyors saying credit condition have improved slightly or significantly. This compares to only 7% in Q4 2023.”
“The commercial property market is driven by several factors including the health of the domestic economy, changes in the supply / demand dynamic across the three main property types and of course inward investment. While there is a general level of well-founded optimism in the Irish market this could be upset if trade tariffs are introduced in the near future by the United States. So that threat will continue to cause a high level of uncertainty.”
Sectoral Analysis
For prime industrial properties, 61% of surveyors expect the capital value to increase and 67% anticipate an increase in rental values.
In contrast, for secondary industrial properties, only 36% expect capital values to increase, and 39% expect rental prices to rise. However, a significant portion, 44% for capital and 50% for rental, respectively, expect prices to remain the same.
Forty-five percent of surveyors expect that the capital value of the prime office will increase, while 38% expect it to remain the same, and 19% expect it to decrease (figures are rounded). In terms of rent for the prime office, 46% of surveyors anticipate an increase, whereas 39% expect the rent to stay the same, and 17% expect it to decrease.
Regarding secondary offices, 82% of surveyors expect the capital value to remain the same or decrease, while 81% anticipate that rental prices will also stay the same or decrease.
For prime retail spaces, 36% of surveyors expect capital values to increase in 2025, while 43% anticipate an increase in rental values. However, a majority, 49% for capital and 45% for rental, believe these values will remain the same.
In contrast, for secondary retail spaces, 36% of surveyors expect capital values to decrease, along with 36% expecting a decrease in rental values. A majority of 49% for capital and 52% for secondary retail rental expect the values to remain the same.
Analysis
Ms Maguire said that while members are seeing strong demand for well located, best in class office buildings, finding occupiers or buyers for second and third generation buildings is much more problematic.
“Members believe that owners of older office stock will be forced to retrofit or to sell at a discount. In fact, 71% of surveyors in our survey believe there will be increased demand for retrofitting, with 36% predicting a rise in office retrofits, while retail and industrial lag behind.”
“While offices are often seen as adopting a more proactive approach to sustainability, the retail sector struggles with the challenge of finance and occupancy over ESG priorities. Members say high costs, perceived risks and limited funding are barriers to retrofitting older commercial properties and this is impacting investor demand.”
When survey participants were asked what part of the property cycle the market was in, the largest cohort, 28% said early recovery, 19% said bottom of the cycle while 16% said mid upturn.
For media queries please call the SCSI at (01) 6445500 and ask for Patrick King.
Note to Editor
The Commercial Property Monitor Review and Outlook Report 2025 is informed by the surveys completed in December 2024 by Chartered Commercial and Valuation Surveyors. The Commercial Property Monitor Review and Outlook provide net balance index charts illustrating surveyor sentiment on market trends. Net balance is calculated by taking the total number of “increase” responses from “decrease” responses and displaying the result. The index charts provided are unweighted composite measures capturing overall market momentum, encompassing variables on supply, demand, and expectations. A total of 161 responses informed this report.