There’s something building in the commercial property market here.
Drive around Dublin city and there are “To Let” signs evident on shiny new looking buildings in a way that hadn’t been apparent until very recently.
Peer in through those gleaming windows and you’ll often glimpse rows and rows of empty desks and chairs.
Some of that is down to people working from home in a way they didn’t pre-pandemic.
But in other cases, it is the consequence of whole floors or entire buildings in some circumstances lying vacant.
The result of oversupply, the ongoing retrenchment in the once real estate hungry tech sector, the slowdown in economic activity as a whole and the impact of rising interest rates, it all adds up to a growing problem for the commercial property sector.
Against this backdrop it is little surprise then that sentiment towards investment in Irish commercial property appears to be souring.
In the last week, it has emerged that several sizeable Irish property investment funds have suspended withdrawals, following a jump in investors seeking to take out their cash.
Those investors must now give notice before they can redeem their funds, to give the managers time to sell property where necessary to meet the calls.
Myles O’Grady, the Chief Executive of Bank of Ireland, also weighed in on the topic of commercial property at the bank’s midweek annual results press conference, describing it as an “area of some concern” and warning that the office segment is one to particularly watch.
The bank is forecasting that commercial real estate prices could drop by 6% this year and an additional 2.5% next year in the most probable scenario, or by as much as 14.5% this year and 8.5% next year in a worst-case situation.
Also expressing a negative view of the sector