City office vacancy levels turning the corner
Office vacancy levels in Dublin may be turning the corner with the first reduction in vacancy levels since 2008.
This possibility is raised in the latest office market reviews from Jones Lang LaSalle and their rivals CBRE. The latter says Quarter One 2011 take up was the strongest since 2008.
JLLS estimate Q1 take up as being as high as 49,586sqm, resulting in a slight reduction in the vacancy levels which is expected to continue over the year.
Fionnuala O'Buachalla, director of JLLS, says "this level of take up is similar to levels in 2006 and 2007 and is an extremely positive start for Quarter 1.
"Although it is difficult to believe this level will remain consistent throughout 2011, in particular when you consider that the two largest deals to Google and Bank of Ireland represented 50pc of total take-up.
"Quarter 1 take up reinforces our view that tenants are making the most of the current value in the market.
"The average rents in the city centre are at €27.60 per sq ft and average rents in the suburbs are at €15.30 per sq ft in Quarter 1."
Colleague Deirdre Costello, said five lettings of over 3,700sqm so far this year compares to the entire 2010 market where there were only four deals over that level.
Dublin city centre remains the location of choice with 73pc of total take-up being in Dublin 1, 2, 4, 7 and 8.
"Furthermore the vacancy rate is 19pc in the city compared to 25pc throughout the rest of the Dublin market.
"At this time, all indicators point to a positive quarter 2 with 245,000 sq ft already reserved and we are only one week into the quarter," Ms Costello added.
Willie Dowling, head of office agency at CBRE, said, "While the headline statistics were assisted by a large one-off transaction, we're encouraged by the fact that Q1 saw more than 22,000sqm of office space reserved in addition to the take-up signed in the quarter.
"This indicates that in the next few months a healthy level of take-up should continue. There were existing requirements for office space in Dublin totalling 103,000sqm in Q1, focussed primarily on the city centre.
"While prime headline quoting rents were stable in the city centre at €345 per sqm and in the south suburbs at €183 per sqm, there was downward pressure on rental levels in the other suburban markets.
"Rents now stand at €151 per sqm in the north suburbs and €145 per sqm in the west suburbs."