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Office rents expected to come under pressure in Dublin

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Going down: Office rents in Dublin could come under downward pressure later in the year

Going down: Office rents in Dublin could come under downward pressure later in the year

Going down: Office rents in Dublin could come under downward pressure later in the year

There is a prospect that downward pressure on prime Dublin office rents could occur towards the end of this year and into 2021 as new supply hits the market and demand remains curtailed. That's the view of agents Cushman & Wakefield Ireland (CWI) in their third quarter review of the market.

During Q3, prime Dublin headline rents held stable at €673 per sq m, although a movement on terms was seen.

Occupier activity improved and the agency estimates that a total of 44,250 sq m was taken up, bringing the year to date figure to 104,150 sq m.

Among the major lettings during the quarter was a 2,780 sq m deal at North Dock Two to Gilead, the therapeutics company. Savills and JLL are joint agents on the scheme being developed by TIO.

Cushman reckons that availability of Dublin office space increased 7pc in the third quarter to 389,500 sq m and attributes the rise mainly to new completions, with the release of second-hand stock to the market continuing to stay low.

"This perhaps again reflects the cautious nature of occupiers at present," says Ronan Corbett, CWI's head of offices.

The upward trend in availability has caused the vacancy rate to rise to 10.1pc at the end of September. While that in the central business district (CBD) was 7.7pc, when signed or reserved space is excluded, the CBD's net vacancy rate remains low at 5.6pc.

A total of 42,700 sq m of office space completed construction in the three months, the majority of which were new builds. A further 490,350 sq m of space was on site at the end of September and positively 53pc of this space is pre-let. Over 100,000 sq m of space is earmarked to complete by year-end with over 270,000 sq m tentatively expected in 2021.

Despite the improvement from quarter two, a delay in decision-making by some cohorts of the occupier market remains evident. This is most apparent in the volume of reserved space which was below average in the three-month period.

Mr Corbett said: "It is very encouraging to see a return in occupier demand during the quarter, which is supported by the increasing level of take-up... we believe in the medium term there is enough pent-up demand in the market to swallow up any overspill in supply."

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