According to a recently released CBRE report, office rental demand continues to exceed available supply in the Irish capital.
Office take-up in Dublin in the first quarter of 2019 was the highest first quarter take-up ever recorded in the Irish capital according to the recently released CBRE Office Marketview Quarter One 2019 Report.
Rising Demand for Office Space
The demand for office space across the city continues to rise, with computer and tech companies dominating the market, accounting for 61% of the office take-up in 2019 so far. Financial firms accounted for 20% of letting contracts, while business services and the public sector accounted for an additional 5% of office take-up.
With Brexit looming on the horizon, office letting demand levels could climb even higher as companies wishing to remain in the EU see Dublin as an alternative to UK cities.
According to the report, three pre-letting transactions signed in the first quarter accounted for more than half of the rental take-up.
The agency reports the volume of demand is currently at 370,000 square meters, while almost 150,000 square meters of space was reserved at the end of the quarter, meaning demand continues to outpace the available supply.
There has also been an increase in suburban office rental activity with the suburbs of Dublin seeing a 27% take-up of office space, a vast majority of which occurred in the southern suburbs of the city (78%).
Companies Rush to Claim Available Office Space
Marie Hunt, the executive director of research at CBRE, explained that, “49 individual office lettings occurred in Dublin in the first three months of the year with 32 of these transactions being to Irish companies. UK companies accounted for 10 transactions in the period while there were 4 lettings to US companies.”
CBRE reported that there are currently 30 office schemes under construction within the city center as of the end of March totaling more than 370,000 square meters.
But Hunt warned companies that about 47 percent of that has already been pre-let, “meaning that occupiers cannot afford to get complacent and put off location decisions in the hope that a large volume of stock will come available over the next two to three-year period”.
While there seems to be a dash to grab any available office space available for rent, rental rates for prime Dublin office locations remained stable at €700 per square meter at the end of the first quarter, although CBRE suggested that these rates may contract over the coming months.
Overall vacancy rates with Dublin saw a slight drop to 5.39 percent from the 6.09 percent recorded at the same time last year. Vacancy rates in the suburbs of Dublin also saw a slight dip in levels.
Unprecedented Office Boom in Dublin
Another recently released report, the Ireland Investment Report produced by Savills Research, noted that nearly 40% of Dublin’s available office space has changed hands within the past six years, revealing an unprecedented boom.
According to the report: the strength of investor interest in Ireland reflects “surging demand for business space due to a rapidly expanding and increasingly globalised domestic economy”.
The Savills report suggests that office space in Dublin remains a good value by international standards and expects the thriving demand for office rentals to continue.