Irish commercial property market continues to gather momentum

Monthly Monitor | October 2025

Irish commercial property market continues to gather momentum

Economic environment

Ireland’s economy remains resilient amid global trade pressures. Irish GDP growth is forecast at 3–4% for 2025, supported by robust domestic consumption and business investment. Modified Domestic Demand (MDD) is expected to grow 2.0–2.3%, while inflation remains contained at around 1.9%, broadly in line with ECB targets. After no less than eight rate reductions the expectation is now for the ECB to hold interest rates steady at 2% for the time being.

Manufacturing and export activity were notably strong to mid-2025, driven by pre-tariff front-loading of US exports. Employment levels remain close to record highs, underpinning consumer spending. Though geopolitical uncertainty and US–EU trade frictions have weighed on sentiment, it appears that Ireland has to date emerged relatively unscathed and some forecasters are revising growth projections upwards for 2025 and 2026.

Public finances remain in good health, with a fiscal surplus expected for both 2025 and 2026, while household balance sheets are strong, supported by rising deposits and falling debt levels.

Investment market

Total investment in Irish commercial real estate reached €1.5 billion in respect of the three quarters to the end of September. Activity in Q3 alone saw €699 million in transactions, almost double the level in Q2, and marking the best Q3 performance since 2022.

The office sector accounted for 47% of total turnover, followed by living (37%), retail and industrial.

Investor sentiment has improved, as highlighted by recent prime office transactions at yields of 5.1%–5.3%, including Deka Immobilien’s acquisition of 20 Kildare Street (€70mn) and Pontegadea’s purchase of 10 Hanover Quay (€66mn).

Office sector

The Dublin office market continued its recovery with take-up for the three quarters to the end of September reaching approximately 178,000 sqm. This represents an increase of 30% over the same period last year and confirms that occupiers are planning for a continuation of the trend for staff to return to the office for at least a substantial part of the working week.

Key transactions included Workday’s pre-let of College Square (at 39,000 sqm, one of the largest office lettings in Europe this year) and Vodafone’s lease of 5,900 sqm at 70 St. Stephen’s Green. Activity continues to be dominated by technology and professional services occupiers, accounting for more than 75% of total take-up.

The headline vacancy rate eased to 15.5%, with 735,000 sqm of available space across the capital. Of the 165,000 sqm under construction for delivery between 2025 and 2027, over 75% is pre-let or reserved, pointing to an emerging supply pinch from mid-2026.

Retail sector

Retail performance has been resilient throughout 2025, supported by strong employment growth and consumer spending. Retail sales volumes have held firm despite rising costs. Prime rents are projected to increase by around 2% year-on-year driven by a scarcity of space in the best locations. The vacancy rate on Grafton Street is now just 4.4%, well below the double-digit vacancy rate which prevailed during and in the aftermath of the Covid pandemic

Investor interest has concentrated on retail park and grocery-anchored assets, with the largest transaction in Q2 being Realty Income Corporation’s €123.5 mn acquisition of the Trinity Collection (Belgard, M1, and Poppyfield Retail Parks).

Industrial sector

The Dublin industrial and logistics market remained stable in the third quarter of 2025, supported by tight supply conditions and sustained occupier demand. Take-up reached 51,449 sqm in Q3, bringing total deal activity for the year-to-date to 164,294 sqm, which is 60% higher than the same period in 2024. Knight Frank reported that development land take-up totaled 284,000 sqm in the first half of the year, a 20% year-on-year increase, with particularly strong appetite for logistics and health-related sites.

Prime rents are projected to exceed €150 per square metre by year-end, supported by several major deals nearing completion, while three significant investment properties have recently been launched to the market. Although transaction volumes have eased from post-pandemic highs, prime rental growth remains strong due to the persistent shortage of new supply and ongoing construction constraints. Demand continues to focus on modern, energy-efficient accommodation, particularly within the M50 corridor and key airport logistics hubs.

Market outlook

The outlook for Ireland’s commercial property market into 2026 is increasingly positive.
Stable ECB interest rates, improving investor sentiment and sustained occupier demand across office, industrial, and retail sectors all point to a measured recovery.

• Office: Vacancy is expected to continue to decline through 2026 amid limited completions. Prime Grade A+ rents are projected to reach €700 per sqm (€65 psf) by year-end, with further upside expected as supply tightens
• Industrial: Supply shortages should maintain upward pressure on rents
• Retail: Continued resilience supported by real wage growth across the economy and VAT reductions for food and catering sectors announced in Budget 2026
• Investment: Volumes are forecast to remain strong, underpinned by renewed confidence from investors across the spectrum, both international and domestic

John Bruder
Chairman, Gresham House Ireland Real Estate

Any views and opinions are those of the Fund Managers, this is not a personal recommendation and does not take into account whether any financial instrument referenced is suitable for any particular investor.

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