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The private rental market is among the few areas of the commercial
property sector to so far escape being negatively impacted by the threat
of a hard Brexit and Covid-19.

This is due, in part, to a continued shortage of supply.

There has been an
escalation in interest from both domestic and international investors
in long-term leasing to local authorities over the last few months,
according to a report from commercial real estate services group CBRE
Ireland.

The market for
industrial and logistics property is also performing well, benefiting
from increased Brexit-related and e-commerce activity.

However, overall, the commercial property market has been “severely tested” this year.

With thousands of shops having to temporarily pull down the shutters
due to Covid-19 restrictions, vacancies have continued to escalate on
prime main streets and in shopping centres around the country in recent
months, the report found.

City centres have been particularly adversely affected due to the absence of students, office workers and tourists.

The likelihood is
that when new letting evidence emerges, prime headline rents will be
between 10pc and 20pc below the Zone A rental values that prevailed at
the beginning of this year, according to the report.

In the offices
space, with thousands of employees now working from home, Covid-19
created huge indecision and many large transactions have been put on
hold indefinitely since the country first went into lockdown in March.

Most occupiers are reluctant to make long-term commitments and there is little urgency in getting transactions signed.

On the back of
this, there has been some “softening” in rents in Dublin city, however
the magnitude of decline is marginal compared with the very sharp
correction in rental values that occurred following the global financial
crisis.

Meanwhile,
investment in the sector has fallen. Almost €2.4bn was invested in the
first nine months of 2020, compared with €3.3bn in the same period last
year, the report found.

Sales processes
have become more elongated and decision-making is taking longer, meaning
that many of the assets launched for sale in the autumn are unlikely to
complete until early next year.

In Europe, total investment in the first nine months of 2020 reached €183bn – down 11pc on the same period in 2019.

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