The national commercial building vacancy rate in Ireland has reached a record high of 14.1%, representing an increase of 0.2% over the last 12 months up to July 2023. According to a new report by GeoDirectory, there were 29,798 vacant commercial units across the country in June 2023, which is 557 more than the previous year.
Impact of the Pandemic
The fallout from the COVID-19 pandemic is likely a key driver behind this trend, as more businesses were forced to close while remote working and e-commerce reduced the need for physical office and retail spaces. Ireland saw rolling lockdowns throughout 2020 and 2021 which devastated many sectors.
Counties with Highest Vacancy Rates
The counties with the highest commercial vacancy rates currently are Sligo (19.9%), Galway (18%), and Donegal (17.9%). In contrast, Meath (10.2%), Wexford (10.6%), and Kerry (12.2%) have the lowest rates.
Ballybofey in Donegal retains the highest vacancy rate nationally, with 29.9% of its commercial units now empty.
Year-on-Year Changes
Over the past 12 months, the percentage of vacant commercial units rose in 20 out of 26 counties across Ireland. Dublin City saw a 0.5% increase to 13.1%, while the vacancy rate across the rest of Dublin County rose from 12.6% to 13%.
Galway recorded the largest jump, going from 17.2% to 18% vacant in just one year.
Impact on Local Economies
High vacancy rates can dampen consumer confidence and make an area less appealing for new businesses or investors. According to GeoDirectory CEO Dara Keogh, the ideal vacancy rate is around 10%. Rates above 30% are particularly troubling.
With remote working trends likely to persist in a post-pandemic economy, vacancy rates may remain elevated as office and retail space needs change. However, local leaders can take steps to incentivise new business openings and repurpose empty buildings.
Opportunities in the Housing Supply Crisis
Some experts believe vacant commercial units, if suitable, could help Ireland’s housing supply shortage by being converted into residential spaces. While not a blanket solution, repurposing vacant properties on a case-by-case basis could boost housing availability.
What This Means for Landlords
While high vacancy rates present challenges, they also offer opportunities for commercial landlords to secure properties at favourable prices. There is a strong demand for high-quality spaces in prime locations. Savvy landlords can negotiate deals to acquire vacant buildings and benefit when the market improves.
Upgrading and remodelling empty properties is a way for landlords to add value. With some vision and capital investment, dated or damaged buildings can be transformed into attractive, modern spaces. Landlords may also consider converting offices into residential units to capitalise on housing shortages.
Overall, ambitious landlords who take an entrepreneurial approach can prosper even in difficult markets. The current vacancy rates make it an opportune time to build a commercial property portfolio.
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