The year 2020 was one like no other for the Irish commercial property market. At the beginning of the year, occupier and investor demand across the majority of markets fuelled a healthy level of existing and pipeline activity.
However, as we neared the end of the opening quarter, Covid-19 delivered an unprecedented level of uncertainty. Everyone scrambled to understand this seismic event and the economic recovery scenarios ranging from V, U, W, L and even a “Nike swoosh”. The time needed to digest and adapt put a significant pause on the market and this was evident in the quarter two statistics, where the volume of newly signed office space dropped to just 8,400sq m (90,417sq ft).
An interesting feature of 2020 was the variety of ways in which Covid-19 affected sectors within property. Offices were paused; and although no occupier stated a 100 per cent move to remote working, questions were raised around the future of the office, its purpose, layout and location. Co-working space which had been forecasted to be a victim of the pandemic at the beginning of April, has instead witnessed a revival in inquiries.
Retail’s struggle grabbed the headlines as already-emerging trends were accelerated. These same trends gave a new urgency to the demand for logistics. Benefitting from the surge in online sales and the need to store inventory, logistics recorded rental growth and yield compression, the only sector to do so in the year.
The questions and changes which Covid-19 initiated in 2020 will continue in 2021 and will frame how we approach business.
Recent analysis from data specialists, Preqin, suggests there is $85.4 billion (€70 billion) in private equity committed to European real estate. Where this weight of capital will be deployed will prove interesting. I expect to see continued interest in both private rented sector residential accommodation and logistics, and an increasing interest in life sciences, health care and social housing. I believe the questions retail faced in the wake of Covid-19 will also mean repurposing becoming a big theme as investors seek to “future proof” their assets from an event of this scale again.
- Aidan Gavin is head of Ireland at Cushman & Wakefield
