Irish Commercial Property is an asset class I’ve highlighted over the past year as perhaps deserving of a place in investor portfolios.
Building resilience into an investment portfolio has been a challenge in 2026. Bond markets have seen capital losses as yields have shifted up. German 10 year has moved from 2.8% to 3.1%. Commodities like Gold or Copper have made some progress but have been quite volatile. Equities have been mixed, with the Eurostoxx index basically flat while US markets are recording small gains driven by an AI surge. We’ve also seen some losses in heavyweight markets such as the German Dax, which is in negative territory so far this year.
Against this background, Irish commercial property has held its own in 2026. For the first quarter, ‘Best in Class’ players such as IPUT have delivered total shareholder return of just under 3%. Other institutional property funds have posted gains of between 1 and 2%.
For Irish Commercial Property funds it’s still all about the office sector. Exposure to this sector typically accounts for 60 or 70% of total portfolio. Office take-up in this first quarter was marginally down on 2025 but ahead of 2023 and 2024. Demand is fairly well spread across sectors like technology, financial services, legal and the public sector.
Prime headline office rents have been fairly stable. CBRE suggest rents for well-located sustainable offices are closing in on €65 per square foot. CBRE are forecasting this to improve to €70 psf or higher.
Yields on office property seem to be stable around the 5% level. A mixed commercial portfolio would also draw income from logistics and retail.
What about vacancy rates? They do seem to have come down although there is quite a range in the estimates! JLL report that vacancy rates have recorded their fourth consecutive quarterly decline, with Dublin 2 seeing the lowest reading. However the headline vacancy rate may be misleading to a degree, as some buildings may be vacant less due to demand factors and more to sustainability reasons. They no longer meet the required environmental standards and some see them as “stranded assets”.
As to supply demand conditions in the office sector, the development pipeline is at its lowest level since the post GFC period.
So it’s a sector with a reasonable income yield and the potential for higher rents.
But commercial property is not immune to global uncertainty and risk, while it has held up well to date. Two issues are worth noting since I last looked at the sector. The importance of FDI remains a key concern. While politics and trade policies in the US remain fluid, comments such as those from Apple that EU regulation may force it to reduce investment in European operations elevate that risk.
Also the inflationary impact from the conflict in the Middle East means we have moved, within the space of a few weeks, from wondering about lower interest rates to anticipating higher ones. This must have some impact on investment intentions.
The fundamentals in Irish Commercial Property remain constructive and the investment case is intact. The risks remain, as they have been, mainly external.
Tradewinds 