Business Commercial Property

Friday 28 April 2017

Brexit aside, Dublin office market is continuing to perform strongly

An artist's impression of the interior of Ballymore's massive Dublin Landings project in the capital's docklands area
An artist's impression of the interior of Ballymore's massive Dublin Landings project in the capital's docklands area
Ronald Quinlan

Ronald Quinlan

anyone looking to gauge the level of activity in Dublin's office market finds themselves spoiled for choice this week, with the release of separate reports covering the first quarter of 2017 by agents CBRE and JLL respectively.

CBRE arguably delivers the more comprehensive breakdown of the lettings signed in the capital within the central business district, its immediate environs and in the suburbs.

New projects for the in-demand docklands area of the city include Capital Dock (pictured) and RGRE's Spencer Place
New projects for the in-demand docklands area of the city include Capital Dock (pictured) and RGRE's Spencer Place

According to it, some 50,000 sq m of office leasing transactions were signed in the Dublin market in the first three months of 2017 while another 50,000 sq m was reserved at the end of the quarter.

A total of 40 individual lettings occurred in Dublin during the period compared to 50 in the first three months of last year.

There was one letting of more than 9,290 sq m (100,000 sq ft) signed in the capital in the first quarter of the year as well as one other large transaction that extended to between 4,645 sq m and 9,290 sq m (50,000 - 100,000 sq ft).

Dublin city centre accounted for 80pc, or almost 40,000 sq m, of office take-up with 27 individual lettings signed in the area during Q1.

RGRE's Spencer Place
RGRE's Spencer Place

A closer examination of the numbers shows that 69pc of Dublin city centre's office take-up was centred around the Dublin 2/4 district.

In terms of demand for office accommodation, CBRE's research shows that this rose during the first three months of year to more than 280,000 sq m. The figure represents an increase of 20,000 sq m on the 260,000 sq m which had been required at the end of 2016.

Some 27pc of office requirements at the end of Q1 2017 are specifically focused on the Dublin 2/4 postcode, CBRE says.

While there were 30 office schemes under construction in the city, extending to almost 410,000 sq m between them, at the end of March, 21pc of that office stock has already been pre-let.

Hannah Dwyer, head of research at JLL
Hannah Dwyer, head of research at JLL

More than a quarter of the 216,000 sq m of new office stock due for completion in 2017 has already been pre-let.

Looking at the profile of the companies that took up space in the first three months of the year, CBRE's research shows that 41pc came from the computer and high-tech sector while public sector/regulatory bodies accounted for a further 36pc. Business services tenants accounted for 10pc of leasing activity in Dublin in the first quarter.

Vacancy rates in Dublin rose in most districts in Q1 but remain low with the Grade A vacancy rate in Dublin 2 and Dublin 4 hovering at just over 3pc. The overall rate of vacancy in Dublin at the end of Q1 stood at 7pc approximately.

Less than 10,000 sq m of office transactions were signed in the Dublin suburbs in the first quarter in 13 individual transactions. While the figure is down by more than 20pc compared to the same quarter in 2016, take-up will be boosted in due course as leases are signed on suburban offices that are currently reserved.

CBRE head of research Marie Hunt
CBRE head of research Marie Hunt

Commenting on the performance of the Dublin office market, CBRE executive director & head of research, Marie Hunt, said: "It is encouraging to see that the Dublin office market continues to perform well regardless of any additional demand that may materialise as a direct result of Brexit, with 20 of the 40 transactions signed in the first quarter comprising indigenous occupiers and the vast majority of leasing transactions emanating from expansionary activity."

Referring to the potential impact of Brexit, she added: "There has been continued press speculation in recent weeks about financial services occupiers focusing on the impact Brexit might have on their operations and looking at locating some jobs in locations such as Dublin.

"It is not clear at this juncture how big these requirements will ultimately be and what the likely timing for any move might be but it seems increasingly likely that Dublin will benefit to some degree."

JLL's analysis of Dublin's office market activity for the first quarter meanwhile varies slightly from CBRE's in terms of the percentage it applies to tech companies' take-up of space.

While CBRE reports that the sector accounted for 41pc of lettings, JLL puts the number at 45pc, noting that companies such as Google, Informatica, Multifonas, Oracle and Citrix have all taken up space since January.

JLL's estimated vacancy rates for Dublin (8.9pc) and Dublin city centre (4.8pc) are again slightly higher than CBRE's respective estimates of 7pc and 3pc.

Offering her view on Dublin's post-Brexit prospects, JLL head of research, Hannah Dwyer, said: "After the Brexit vote back in June, there was an initial flurry of enquiries from London-based companies looking for office space.

"This was just in the form of desk-based enquiries on rents and availability. In the last few months, however, enquiries have picked up momentum with companies now making site and building visits over to Dublin and undertaking due diligence."

While acknowledging the competition Dublin faces from cities such as Frankfurt, Paris, Amsterdam and Madrid, Dwyer added: "JLL is working with a number of clients who are seriously considering a move to Dublin as part of their strategy, so enquires are now translating into real post-Brexit activity. We are expecting to see some direct Brexit-related deals signing in the next three months."

The greatest demand for office space, Dwyer said, is from UK-based financial companies and related services, and tech firms, with the demand for space ranging from capacity for 150 people up to 1,000 people, with only a few at the larger end of this scale.

Sunday Independent

Promoted articles

Also in Business