Dublin office take-up strongest in 10 years
The latest report on the Dublin office market from JLL shows that demand for space continues to be strong, with 2.1m sq ft occupied in the year to date.
The figure represents a 22pc increase in volume compared to the same period last year.
While this year's performance so far was driven by a particularly strong second quarter, activity in the three months to the end of September remained steady with just under 450,000 sq ft of deals completed.
JLL say the increase in take-up in the last 12 months has been largely underpinned by a rise in the number of larger-scale deals, with nine transactions greater than 50,000 sq ft, of which four were greater than 100,000 sq ft. This compares to five deals greater than 50,000 sq ft, of which one was greater than 100,000 sq ft, in the same period in 2016.
The large deals so far this year include: Facebook letting at The Beckett on East Road in Dublin's northern docklands (190,000 sq ft); AIB letting at Block H Central Park in Leopardstown (152,000 sq ft); the OPW at Miesian Plaza on Baggot Street (143,000 sq ft); and LinkedIn at Wilton Place (130,000 sq ft).
Demand continues to be strongest from tech-based companies and financial services firms, which accounted for 50pc and 15pc of take-up respectively. Most of the activity is coming from existing occupiers in Dublin who are growing and expanding, and are not Brexit-related deals, JLL reports.
In terms of supply, the vacancy rate remains steady at 7.7pc, although supply is tighter in the city centre at 4.7pc. There is currently 4.5m sq ft of space under construction and refurbishment in the city centre and suburbs, although 40pc of this is either pre-let or reserved.
The divisional director and head of research at JLL, Hannah Dwyer, said: "It is positive to see the Dublin office market continue to perform strongly, with an impressive level of activity in the first nine months of the year.
"In addition to the space that has already signed, there is an additional 1.5m sq ft of space that is currently under offer. Assuming some of this space closes before the year-end, take-up could potentially achieve over 3m sq ft which would surpass the previous peak of 2.9m sq ft and would therefore be a new record for the Dublin market."
Dwyer added that it was positive to see an "impressive pipeline" of office space coming on stream in Dublin through redevelopment and refurbishment activity.
However, she cautioned that with so much of that space due for completion in the next two years already pre-let, the choice for prospective occupiers would be limited.
Giving their assessment of the Dublin office market, agents Cushman & Wakefield report that the take-up for the year to date is the highest recorded nine-month level since 2007.
While also noting the contribution of large deals such as Facebook and LinkedIn to this year's deal activity, Cushman & Wakefield cite the emergence of the Serviced Office (SO) sector in the Dublin market.
They believe this is a phenomenon to watch, as international researchers are reporting a larger presence of this sector in a number of European cities.
Looking at the availability level in Dublin, Cushman & Wakefield reports that this edged downwards by 1.9pc during the third quarter, with the market witnessing a slowdown in secondhand space released, reflecting the overall continued shortage of supply.
Dublin's CBD prime rental levels are expected by Cushman & Wakefield to remain at €619 per sq m for the remainder of 2017.
Upward pressure on rents is forecast for 2018 however, with CBD rents expected to rise by 4.4pc to €646 per sq m.
The firm's head of offices, Ronan Corbett, said: "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."