A good year for Dublin office market

Savills report notes remarkable performance against backdrop of economic gloom

Article posted: 06 Dec 2011

The market for office space in Dublin has experienced another remarkably good year in 2011. While the property market as a whole continues to be very subdued, demand for office space has continued to improve since its low point in Quarter 1, 2009, according to recent research by Savills.

Take up in 2011 will be approximately 1,722,225 sq ft compared to 1,259,377 sq ft in 2010 and 828,821 sq ft in 2009. To put this in context, the average annual take up between 1995 and 2010 was 1,754,517 sq ft so the performance during 2011 matches this annual average which is a remarkable performance against a background of continuing uncertainty and confusion in terms of economic outlook.

In the city centre, the ICT sector continues to be the main driver of demand with Google’s acquisition of Montevetro (pictured) the biggest deal of the year but LinkedIn and Facebook have also been active while in the suburbs demand has been from a variety of sectors including Paddy Power, Tullow Oil and ESB.

Most tenants still have a preference for good quality previously fitted space as they seek to minimise their fit out costs but as there is a limited supply of this type of space, many new buildings which have remained vacant for 4 years or so since their completion are now attracting tenants. Indeed, the quality of available space is steadily decreasing as tenants tend to pick off the best available within their price bracket and there is no new product being constructed.

The vacancy rate has stabilised and even fallen a little during 2011. New construction has stopped but companies downsizing have over the last 18 months released space back onto the market which has kept the vacancy rate high. It is clear that there will be some further space released back to the market during 2012 with AIB Bank for instance announcing that they will vacate their 10,000 sq.m. IFSC building and move staff back to Bank Centre. Despite this type of addition to the vacant stock, Savills believe that the vacancy rate will continue to fall during 2012 and if anything may gain a little momentum.

For a full copy of the report click here: http://www.savills.ie/_news/newsitem.aspx?intSitePageId=112474&intNewsSitePageId=116578-0&intNewsMonth=11&intNewsYear=2011

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Posted by Jules