Ireland's housing crisis has been a persistent challenge, with escalating property prices and a dearth of affordable housing options. In Galway, the short supply of housing has seen a notable increase in house prices, with three-bedroom semi-detached homes having surged by more than 10 per cent in price in 2025.
Despite this acute shortage of residential units, Galway is simultaneously experiencing a rising number of vacant commercial properties, with empty shop fronts and underutilised upper floors of retail units becoming a common sight in the city centre and across the county’s towns.
With an oversupply of one property type posing a threat to the local economy and an undersupply of another contributing to the highest rate of child homelessness in the State’s history, the Galway Advertiser explores the potential and pitfalls posed by converting these vacant units.
Are high commercial vacancy rates an untapped resource?
The national commercial vacancy rate has reached its highest level on record at 14.5 per cent, according to the latest GeoDirectory Commercial Buildings Report. The report, prepared by EY, shows the rate rose by 0.2 percentage points in the last quarter of 2024, marking the highest level recorded since GeoDirectory began tracking data in 2013.
There were 30,635 vacant commercial units across the country in December last year. Sligo recorded the highest commercial vacancy rate at 20.6 per cent, followed by Donegal at 20.1 per cent and Galway at 18.8 per cent.
The Above the Shop research survey by Hardware Association Ireland (HAI ) further highlights this opportunity, estimating that up to 40,000 new housing units could be created nationwide, with 20,000 coming from converting vacant upper floors of commercial properties.
However, unlocking this potential requires targeted financial incentives and regulatory reform.
Policy initiatives and legislative support
The Government has recognised the potential of converting vacant commercial properties into residential units as a viable strategy to combat the housing crisis. Planning exemptions introduced in 2018 removed the requirement for planning permission for the conversion of certain types of vacant commercial property into residential units.
In 2022, this exemption was extended to allow vacant pubs to be converted into homes. Between 2018 and 2023, local authorities received 1,165 notifications to convert vacant commercial premises into new homes, with the potential to result in 2,716 new homes across the country.
The Above the Shop report calls for further incentives, including a waiver on Capital Gains Tax (CGT ) for properties converted into residential use, enhanced grant structures, and a more flexible tax relief system to allow property owners to offset renovation costs against rental income.
Such measures would significantly increase the financial viability of conversions.
Case studies: successful conversions
Converting vacant commercial properties into residential units has yielded positive outcomes in various parts of Ireland. For instance, the redevelopment of almost 100 pubs is set to create nearly 300 new homes, demonstrating the efficacy of such initiatives. These projects contribute to increasing housing supply and revitalise urban areas by repurposing underutilised spaces, thereby enhancing community vibrancy.
Economic and social benefits
Repurposing vacant commercial units into residential spaces offers several economic and social advantages, including:
Urban revitalisation
Encouraging city-centre living can bring footfall back to struggling retail areas, supporting local businesses.
Efficient land use
Reducing the need for new land development preserves green spaces and mitigates urban sprawl. Sustainability: Renovation and reuse of existing buildings has a lower environmental impact than new construction.
Increased housing supply
Unlocking these properties could provide thousands of additional homes, alleviating the housing crisis.
Challenges and considerations
While the conversion of commercial units holds promise, several challenges must be addressed.
Structural and regulatory barriers
Many properties require significant renovations to meet residential standards, particularly in terms of fire safety and accessibility. The Above the Shop survey found that complex fire certification and planning regulations were among the main barriers preventing property owners from undertaking conversions.
Financial feasibility
The survey reported that 70 per cent of property owners considered converting their properties but found the costs outweighed the benefits under current conditions. Grant schemes and tax breaks would be necessary to bridge this financial gap.
Skilled labour shortages
A lack of available tradespeople to carry out the necessary work was cited as another key constraint. Investment in skills training would be required to facilitate wide-scale conversions.
Vacant property tax
The survey recommends a graduated vacant property tax that increases over time to encourage owners to act rather than leave properties idle.
Conclusion
The high commercial vacancy rates in Galway present a strategic opportunity to address the ongoing housing crisis through the conversion of unused commercial spaces into residential units.
Supported by favourable Government policies, research-backed recommendations, and successful case studies, this approach offers a pragmatic solution to enhance housing supply, revitalise urban areas, and promote sustainable development.
However, careful consideration of structural, regulatory, financial, and workforce factors is essential to ensure the success and sustainability of such conversions.
By embracing this strategy and implementing key recommendations from the Above the Shop report, Galway could make significant strides towards alleviating its housing challenges and fostering a more vibrant, economically resilient urban environment.
