Dublin Office Market Trends
The office vacancy rate in the capital has dropped to its lowest level since 2008, according to the Q2 2014 office market report by Jones Lang LaSalle.
The report says that take-up in the Dublin office market in Q2 2014 of almost 420,000 sq ft has brought the half-year total to over one million sq ft and reduced the vacancy rate to 16.6%.
JLL notes that the most dramatic drop was in the city centre, which fell from 14.7% last quarter to 12.9% at the end of Q2, with the suburbs vacancy rate at 21.1%. No office lettings exceeded 50,000 sq ft, while only three were for spaces of more than 20,000 sq ft. Instead, the average transaction size of the 43 deals signed in Q2 was just under 10,000 sq ft.
JLL reports that the technology, multimedia and telecoms sector continues to be the most active in the market, with AdRoll and Indeed both doubling their head count and space occupancy in the last quarter. It adds that this trend is expected to continue, given that a number of large and small enquiries were unsatisfied and thus still in the market.
As a result of the high level of demand and diminishing supply, quoting rents and prime rents in the city centre have also continued to rise – respectively, they are now at €45 per sq ft and in the low €40-plus range. By contrast, the suburban market's quoting rent and prime rents have remained constant at €20 per sq ft and €18 per sq ft respectively.
According to Simon McEvoy, associate director at JLL: “The main challenge we all will be facing in the market is the continuing demand for Grade A stock in the city centre. That now makes up only 3.5% of the vacancy, and with the deals already in legals for the third quarter, it is set to reduce further.”
McEvoy adds that the resulting situation may see tenants becoming frustrated with the lack of supply in the city centre, forcing them to focus on locations in the city outskirts and suburbs. “However, we now have a rental level that makes development economically viable again, and in addition to the developments already started in the city, there are many more in the design phase that are expected to start onsite in the next 12 months to meet future city centre demand.” (July 2014)