Office letting activity helps cut vacancy levels
Offices are now the best performing sector of Dublin's commercial property market. This is the view of Jones Lang LaSalle which says that the overall vacancy rate has fallen to 18.9pc.
Competing agents CB Richard Ellis, while agreeing on overall trends, differs on the scale of the vacancy levels which it believes stood at 22.5pc at the end of September.
CBRE is also more cautious about vacancy levels in a key area and says vacancy fell to 16.3pc in Dublin 2/4. In the south suburbs the vacancy level is as low as 14.4pc. JLL estimates vacancy rates for the entire city centre at 15.8pc and for all the suburbs at 22.8pc.
JLL director Deirdre Costello has also expressed confidence that office rents have bottomed out at an average of €25 per sq ft in the city centre which is below the €30 per sq ft that CBRE is guiding for prime city centre offices. JLL is guiding €16 per sq ft for suburban offices.
JLL director Fionnuala O'Buachalla, said: "Take-up in the first three quarters of 2011 totalled 1.36 million sq ft, which already exceeds total take-up for the entire of 2010. Over 42pc of space taken was by companies who are expanding, which is great news for Ireland. We are seen as a location that can offer competitive occupancy costs, flexible lease terms and choice of good quality accommodation".
In terms of location, the demand for city centre was 51pc with 49pc in city edge and suburbs. In Q3, the clear location of choice was Dublin 4 which had almost 23pc of take-up, closely followed by Dublin 2. The average deal size increased slightly to 8,333 sq ft with 72pc of all transactions being below 10,000 sq ft which is standard for the market size.
Darren Nugent, director of offices at CBRE, said: "Having declined by more than 50pc from peak, headline quoting rents for prime Dublin 2/4 office buildings remained stable at €323 per sqm during Q3 2011. However, he believes that rents for secondary offices will come under further downward pressure as tenants continue to seek out attractive lease terms and because of the quantum of older accommodation that is being marketed to let in the capital.
He estimates as many as 63 office lettings in Dublin during the third quarter and 41 of them, with a combined floor area of 26,386 sq m, were located in the city centre, a district which accounted for 61pc of take-up. While new companies boosted demand, much of the recent take-up is attributable to existing tenants exercising break options and negotiating favourable leases in other locations.
Major recent lettings include: LinkedIn in Wilton Place, Dublin 2; BSB in Leopardstown, Dublin 18; HSE in Blanchardstown and Dell in Cherrywood. Demand for offices in the near future is estimated to amount to a further 100,000sqm.