Hibernia Reit reports lower office take up as large transactions fall
Property investment firm Hibernia Reit has said the take up of office space in the three months ended 30 June was lower than in recent quarters, mainly due to fewer large transactions.
Only one of its letting exceeded 50,000 sq. ft. in size during the period.
Nonetheless, ahead of its AGM today Hibernia said the quantum of all Dublin office space leased in the first half of 2019 exceeded 1.7 million sq. ft, as active demand “remains high”.
It added that a number of lettings are expected to close “in the near term”.
“Investment demand also continues to be strong, with large transactions in the office and residential sectors in the first half of 2019 and Irish investment volumes totalled €1.8bn,” according to the group.
Office vacancy at the end of June 2019 was 5.9pc for Grade A space in central Dublin and 6.4pc for Dublin overall.
Kevin Nowlan, CEO of Hibernia, said: "Tenant take-up in Dublin offices in the first half of 2019 exceeded 1.7million sq. ft., a modest increase on the first half of 2018, and active demand continues to be strong with a number of letting transactions expected to close soon.”
"As noted in our preliminary results in May, two of our key near term priorities are reducing the vacancy rate in our office portfolio and concluding the active rent reviews. With the majority of our vacant space now under offer and eight of the nine rent reviews outstanding at 31 March 2019 now agreed, we are making good progress on both fronts,” he added.
The vacancy rate in Hibernia’s in-place office portfolio is currently 15pc, up from 12pc at 31 March 2019 following two tenants moving out of 19,000 sq. ft., as it flagged in the preliminary results in May, as well as the acquisition of 10,000 sq. ft. of vacant offices.
Since 31 March the group has settled six office rent reviews over 44,000 sq. ft., all of which settled at or above estimated rental value ("ERV"), generating an uplift in contracted rent of €1.2m per year.
A further two office rent reviews over 19,000 sq. ft. have terms agreed, with an aggregate increase in contracted rent of €0.5m per annum.