Office take up in Q1 hits fastest pace for a decade
THE office market in Dublin shows no sign of slowing down as take up hit its fastest pace for a decade during the first three months of the year.
Data from CBRE found that some 62,990sqm worth of office space was taken up in the capital in the first quarter of 2014. That was the highest level of occupancy since 2004.
Some 59 deals were signed in Dublin between January and March. Another number of deals were agreed in principle but have yet to be formally confirmed.
About 22,000sqm of space has already been reserved, implying a strong pipeline of deals will come during the rest of the year.
In contrast to last year, the market is being driven by relatively small deals.
Of the agreements signed off on so far, only three of them are for more than 4,645sqm (50,000 sq ft), a further eight transactions extended to between 20,000 and 50,000 sq ft.
"With a number of large requirements having been satisfied over recent quarters, there was a decrease in the overall volume of demand in Q1. In total, overall demand for office accommodation in the capital was approximately 205,000sqm at the end of Q1," said CBRE.
The vacancy rate in the market declined marginally to 13.9pc, down from 15.3pc at the end of 2013.
Despite fears of a shortage in prime areas of the property market, CBRE's research shows that a third of the 585,000sqm being marketed in Dublin at the moment is located in Dublin 2 or Dublin 4 – considered the most desirable location in the country.
However, barely a third of those properties in south Dublin are classed as "Grade A". The IDA in particular has repeatedly warned that there is an urgent need for new construction of grade A office buildings in an effort to attract inward investment.
Tenants in the computers and high tech sector accounted for 37pc of office transactions signed in Dublin during Q1 2014 as a result of 3 large lettings to Yahoo, Amazon and Dropbox in the period.
The financial services sector accounted for 16pc of take-up signed in Dublin during Q1 while the professional services sector accounted for a further 21pc of activity in the period. Tenants in the manufacturing, industry and energy sector accounted for 8pc of take-up in Q1 with the public sector accounting for 10pc of office take-up in Dublin during the first quarter of 2014.
Prime rents in Dublin remained stable at €377 per square metre (€35 per sq ft) during Q1 2014 and are expected to rise further over the course of this year.
Most analysts expect rents to head towards €40 a foot by year end.