Watch Out: Commercial Property Rents Set to Surge 2.5% — What That Means for Your Next Investment Move

Ever wonder if the commercial property market is finally catching its breath after all that wild turbulence? Well, brace yourself—rents and capital values for prime commercial properties across Ireland are set to tick up by an average of 2.5% over the next year, according to the latest insights from the Society of Chartered Surveyors Ireland (SCSI). Now, that might not sound like a massive leap, but when you factor in subtle shifts like prime office rents climbing 2.6%, and retail spaces nudging upwards too, it signals a market that’s cautiously inching toward recovery. It’s kinda like seeing a sprinter slowing to a jog—steady, deliberate, yet loaded with potential. What’s fueling this? Robust demand for logistics and industrial spaces—those unsung heroes of the property world—as well as improved confidence thanks to more stable valuations and credit conditions. Still, with global uncertainties lurking and consumer habits evolving faster than ever, the road ahead requires savvy moves and sharp eyes. Are you ready to navigate this cautiously optimistic landscape and make the most of these trends? Dive in and get the full scoop. LEARN MORE

Rents and capital values for prime commercial properties nationally are expected to increase by an average of 2.5% over the next 12 months, the Society of Chartered Surveyors Ireland (SCSI) has found.

Chartered commercial and valuation surveyors expect prime office capital values and rents to increase by 2.1% and 2.6%, respectively.

Prime retail capital values will increase by 1% and rental values by 1.8% on average, according to the survey. 

High demand for logistics and distribution spaces has continued to drive prices for both prime and secondary industrial properties and Gerard O’Toole, president of the SCSI, said the wider market is showing tentative signs of stabilisation and improvement. 

“We are seeing resilience in key areas particularly in the industrial segment, where demand remains robust, and in prime office and retail assets where quality and location are driving selective growth,” he said.

“Of course, challenges remain. These include subdued investor activity due to ongoing global uncertainty, changing work patterns and evolving consumer behaviour. However, the overall sentiment is one of measured confidence.” 

Two years ago in the corresponding survey, a majority of respondents (61%) viewed the market as expensive or very expensive.

In this survey, that figure dropped to 31% while the proportion viewing valuations as fair value increased to 57%. 

In addition, 51% of respondents perceive the market to be in some stage of recovery or upswing, with 33% identifying early recovery and 18% mid-upturn. 

O’Toole said the findings suggest that sentiment has shifted towards cautious optimism with most participants anticipating further recovery rather than renewed decline. 

“Combined with previous sentiments of more stable credit conditions and valuations being viewed as closer to fair value, the market appears to be in an early recovery phase, with potential for continued capital appreciation alongside moderate rental growth,” he said.

“While the recently finalised US/EU trade deal has removed a significant source of international uncertainty, questions remain over the long-term implementation and impact of the agreement.” 

For prime industrial properties, 50% of surveyors expect the capital value to increase and 51% anticipate an increase in rental values while the number forecasting that they will remain the same are 40% and 44%, respectively. 

In contrast, for secondary industrial properties, only 34% expect capital values to increase, and 42% expect rental prices to rise. However, a significant portion, 57% for capital and 44% for rental, respectively, expect prices to remain the same. 

Some 54% of surveyors expect that the capital value of prime offices will increase, while 33% expect it to remain the same.

In terms of rent for the prime office, 56% of surveyors anticipate an increase, whereas 34% expect the rent to stay the same.  

Regarding secondary offices, only 14% of surveyors expect the capital value to rise, while the number forecasting a rise in rent is just 21%, with 81% anticipating that rental prices will stay the same or decrease.

While 47% expect capital values to remain the same, 39% believe they will fall. The respective figures for rent are 42% and 37%. 

For prime retail spaces, 34% of surveyors expect capital values to increase over the next 12 months, while 48% anticipate an increase in rental values.

However, a majority, 59% for capital and 45% for rental, believe these values will remain the same.  

In contrast, for secondary retail spaces, just 16% of surveyors expect capital values to increase, 52% believe they will remain unchanged and 32% believe they will decrease. The corresponding figures for rents are 18%, 57% and 25%. 

Bernadine Hogan, chair of the Commercial Agency Committee, said the findings underscore the industrial sector’s dominance in current market dynamics, steady but cautious progress in offices and continued headwinds in retail. 

“Industrial continues to lead the way, although the sentiment towards secondary industrial assets is more restrained,” she said.

“The office sector also exhibits overall growth reflecting ongoing recovery in prime office markets despite challenges in secondary spaces where sentiment is notably weaker.” 

“In contrast, retail presents a much more mixed picture, while prime retail locations demonstrate relative stability and modest growth as they adapt to meet changing consumer behaviours, secondary assets continue to struggle.

In the survey, almost a third of respondents predicted a decline in their capital values while a quarter forecast a decline in rents.”  

Hogan said the surveyors noted strong growth potential in essential service-oriented and residential sectors, while hospitality was reported as more subdued. 

“Student housing stands out with the highest projections, anticipating rental growth of 4.5% and capital value appreciation of 4.9%, driven by strong demand and constrained supply.”  

“Aged care facilities also exhibit strong fundamentals, with rental growth projected at 4% and capital values rising by 4.4%, reflecting demographic trends and the need for specialised care assets.

“Hotels are forecasted to have the most modest growth, with rental increases of just 1.9% and capital values slightly lower at 2.1%, indicating a cautious recovery in the hospitality sector.” 

(Pic: Getty Images)