state of commercial property?

Hi guys,
I hope it`s ok to post this topic here, I realise most people have their eye trained on residential movement or lack of!
Can anyone tell me if the residential market is being mirrored in the commercial market? I have a small retail premises and was considering selling or renting it…thanks. :question:

Good question as IU am considering renting a place but believe that the rents are too high when taken with the high vacancy rates.

If anyone knows about commercial can you share?

I’m also in this boat, looking to rent more commercial space. Have been for 2 years now.

I’ve had my eye of three places for almost a year now. They haven’t moved one has changed agent in the mean time. Also the rents have dropped on 2 of the units while the remaining one was already very cheap. Which makes me want to wait even more. However I can’t wait forever but I don’t want to be signing that lease and the next day the headline is BOOM goes BANG!

I don’t see many places moving personally. Lots still for sale that where for rent last year/ So that tells you a lot. Tale Castle market, a while back the whole lot was put up for sale. I’m sure that investor knew the story. I’m in the city centre everyday. Rents are extreme and prohibitive to anything bar SPAR/CENTRA/Over priced coffee houses/Obrien’s and that kind of business.

I’ve asked agents this and that and while many believe residential is in for a rough ride they never admit commercial will fall. I don’t think this is a reasonable position.

If people start spending less, the demand for commercial rental will collapse and there is plenty of oversupply anecdotally on daft. Go look at the commercial section; take Greenouge yards of stuff off plan for sale there. Makes me very very cautious.

People I deal with in the UK can’t get their heads around the prices here and they’ve seen a lot more water under the bridge than I have and they keep telling me for what goes up will come down. You can’t help but agree!

I looked at the new Smithfield development a while ago, €60+ per square foot!

You’ll not high profile units around Moor St & Parnell St are still empty. There is a huge amount of vacancy as far as I can see in all the new build apartments. There are palce that have been empty for over 5 years. Where is the BOOM??? I don’t see it.

Commercial leases are too inflexible and very archaic. Key money still exists which is illegal in many countries and is plain stupid. 100% Pure Irish Rip Off. Nice one!

Of course there are great opportunities to be hand but
How long can you survive through the slump to garner a stronger position for the future?

I see a massive rise even more of Chinese/Aisan led business ventures.

I feel these secular communities have the old system of family and extended friends all working together and probably mostly for free or very low wages as all are tightly knit and will all benefit in the long run. This is an advantage all migrants have as long as they avoid detention which in my opinion in this country is easy.

You can not compete at this level unless you want to break the law.

Hey I’m in the boat too :slight_smile: And it had better not be the Titanic :wink: I have to say I’m genuinely confused about the state of the commercial market with one exception, outside Dublin I would be expecting massive falls in both commercial prices & rents. There are going to be alot of property-dependent offices & retail units being freed up IMO.

Dublin on the other hand… it’s tough. Large (and I mean large) warehouse space is not easy to find & extremely pricey. The minimum-length leases on some Retail units are also a joke.

2 points I was going to raise but didn’t as I thought I’d typed enough :wink:

Length of leases is a joke. The speed at which the world changes in terms of what consumers want & technology you can’t be getting into 25 year FRI leases unless you score rights and the owner might want to develop but it unusual that people get caught on this. I know of a few exceptions but they are rare as I said.

Every place I look at will not give you any more that 3 years. No one wants you in for longer than n 4year 9months so as you don’t gain rights leaving the property owner only option but to buy you out. Everyone is hoping to develop or sell to developers and its really choking space in the city centre for anything but apartment blocks.

What kind of size are you looking at SOMA? SqM/SqFt

BTW There use to be a whole forum for commercial property but we can have a dedicated thread in the central bank.

Thanks for the replies guys… :wink:

When I take the Enterprise train service from Dublin to Belfast, I always notice the old Gateway campus at Clonshaugh still has a huge banner announcing it as being available to let.

Need I remind people; Gateway pulled out of Ireland over six years ago.


What exactly is ‘key money’?


Usually you see **lease for sale + plus "key money"** which is a lump sum up front non refundable afaik that goes straight into the pocket of the party selling the lease or landlord. Obvious scam.

For example a unit in the Georges St Arcade about 2/3 years back was looking for 40K for the years rent and 40K Key money!

I believe its illegal in a lot of place, well I know it is in Canada and I think also the UK.

I could be wrong but some dude paid 175K key money on a restaurant lease on the Southside somewhere, Dalkey or Killiney. I hope I am right on this. I usually walk away when I hear key money. So I’ve not experience of an actually transaction.

The way I see it its like you pay for the priveledge to buy the lease, a buying fee!

Ok, I get you. From checking wikipedia it seems that this is usually the case if you are renting below market level. In that case it seems reasonable to pay an upfront on it - should be the present value of the money you save on the below market rent if the analogy to the swap market is correct (ie, you enter a swap at market then you pay nothing up front, if after a year rates have moved in your favour you can ‘sell’ the swap to your counter part, or a third party, for the PV of the income stream).

If the rent is at (or above) market then you’d be right to walk, of course.


This is the link

Hmm I’m not so sure about the below market level. I’ve noticed most leases go for sale not far away from the rental review hwihc means its going to get bumped up to market level or more!

Also I’m not so sure about about “swap at market” in the Irish context.

Way I see it, its a lot of money to stump up front if you want to be a small time retailer. Security deposits I have no quibble with.

In that case walking is definitely the right thing to do. I have no idea about how the commercial rental market in Ireland works and if supply really is tight then you could imagine this sort of thing could happen.


I’m in final year IAVI (yep I’m an EA), and am doing my thesis on:

Expected changes in commercial leases structures in Ireland (due to oversupply)

in which I hope to outline what changes if any will occur in the standard leases (25 yrs FRI etc), as has happened in the UK in the 90s and the US and other countries in the last 20 or so years.

Is anyone here a tenant or landlord (or EA for commercial) who’d be willing to answer a questionnaire? I should have it ready by end next week and I’d be very grateful for some knowledgeable responses.

PM me if interested.

Thats very interesting. I was going to make the point the lease offerings must come under pressure and change adapting to market.

Sorry I’m useless for your questionnarie but please do offer your opinions since you are focused on this very matter, I believe its you’re exatly the persone this thread was hoping to hear from!

I’m concentrating on retail warehouse units in commuter towns, specifically Carlow/Portlaoise/Kilkenny etc, as there’s a glut of them.

The main change to leases that I’ve seen recently is the introduction of break clauses at yr 5, sometimes a tenant only option. This effectively negates the rent review clause.

I’m hoping to see if there’ll be any sales related leases, i.e. the rent is based on the success of the tenant; as is the standard lease in the US.

I wonder if lease terms will be influenced by the prospect of over renting? I.e. where the rent agreed in the lease is more than the market rent. It might lead to well advised tenants seeking better terms at lease negotiation stage than upward only rent reviews? Over renting became a big issue in the UK commercial market after the last bubble burst and commercial rents began to fall.

What do you do in this situation. If you have signed an agreement how can you re negotiaite if you haven’t a tenant requested break clause as your get out of jail card?

If you are a tenant that finds the rent agreed in the lease is higher than the market rent in subsequent years you have no option but to pay the agreed rent. Rent reviews are typically upward only and these reviews occur every 5 years. In a period of prolonged rent deflation as seen in the UK in the 90’s upward only reviews put many businesses at a disadvantage when they couldn’t avail of lower open market rents.

Its up to the tenant to agree the most favourable terms possible in the lease to avoid a situation where they may be paying above the market rent.

A good move for tenants is to agree as many tenant only break options in a new lease as possible if they are unable (which is likely) to negotiate upward and downward rent reviews.

The road to recovery for the Irish economy in the coming years will involve new businesses avoiding lingering bubble costs by paying for the sins (and stupidity) of their fathers.

This is some game of poker.