News

2nd November 2017

Robust demand continues to drive Dublin office market

A busy third quarter for the Dublin office market saw approximately 67,500 sq m of space occupied in the three months to September, double the previous quarter’s total. Activity in the market is supported by robust demand for both new and second-hand office space and continued growth in employment.

 

Year to date take up reached 196,000 sq m, the highest nine-month level recorded since 2007. Furthermore, a significant quantum of space was either signed or pre-let at quarter end. Therefore, the projected annual total looks set to exceed 250,000 sq m, above the long-run average for the fourth consecutive year.

 

New completions are boosting activity levels in the Central Business District (CBD); the top three deals in the year to date consisted of newly delivered office stock, all of which are located in the CBD. This highlights the strength of expansion-led demand and clear preference for prime Grade A space in the current cycle, resulting in an above-average CBD ratio. In total, 58% of all occupied space in the year to date has occurred in the CBD, of which 36% comprised of newly completed office space.

 

The IT/Telecommunications sector continues to command the highest share of take up, led by key occupiers such as Facebook and LinkedIn during the year to date. Also of interest is the emergence, albeit slowly, of the Serviced Office (SO) sector in the Dublin market. This feature is one to watch, as international researchers are reporting a larger presence of this sector in a number of European cities.

Availability levels in Dublin edged downwards by 1.9% during the third quarter, with the market witnessing a slowdown in second hand space released, reflecting the overall continued shortage of supply. Availability, net of signed and reserved space, declined even further, bringing the net vacancy rate to 8.3%, down from 8.9% in quarter two. However, in the CBD, a slight upward movement in supply was recorded, partly reflecting the release of newly refurbished builds in the city centre which have not yet been taken up.

 

Development activity continues to remain a key characteristic of the Dublin office market, with the quantity of space under construction increasing by 11% in quarter three to 370,450 sq m. A healthy 22% of this is pre-let, and a further 14% reserved. With almost three quarters of this space located in the CBD, the proportion of occupier activity in the city centre is expected to rise further over the coming year.

 

CBD prime rental levels are expected to remain at €619 per sq m for the remainder of 2017. Upward pressure is forecast for 2018, with CBD rents rising 4.4% to €646 per sq m. Although there have already been a small number of deals closed above this rate, these would be considered smaller, niche deals, and not the prevailing tone of the market.

Commenting on the market, Ronan Corbett, Head of Offices, Cushman & Wakefield noted; “While new construction starts increased this quarter, the medium-term view is that the quantity of new starts will slow down, as the lack of good sites and finance impacts developers, particularly in the CBD. Assuming demand remains robust, and all indications are that this will be the case, supply levels could begin to tighten again.”

 

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About Cushman & Wakefield

Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 43,000 employees in more than 60 countries help investors optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter. 

Cushman & Wakefield is the commercial partner of the Sherry FitzGerald Group in Ireland. 

 

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