Dublin Enjoys 2.7 Million Square Feet of Office Leasing Activity in 2016
According to JLL, 2016 has been another strong year for office demand in Dublin, with 2.7 million square feet of office space occupied in the last 12 months across 232 deals. This is 35% higher than the 10-year average take-up level of 2 million sq ft. The boost in total volumes was achieved after a strong Q4, when close to 950,000 sq ft of deals closed.
In terms of general trends, demand from occupiers remains focused on space in the city centre, accounting for 63% of take-up, with Dublin 2 the dominant sub-geography (26%). In terms of size, the most active category remains sub-10,000 sq ft, accounting for 80% of deals. There were 3 deals greater than 50,000 sq ft this quarter which boosted total volumes and the largest deal was a pre-let to Amazon at Vertium on Burlington Road (172,000 sq ft). Technology, Media and Telecommunications (TMT) companies continue to drive demand, accounting for 42% of take-up. This includes lettings to Amazon, Docusign, SAP, Zalando, SAS and Hubspot in the last 3 months.
On the supply side, the vacancy rate has increased in the quarter from 7.8% to 8.4%. This was due to an additional 410,000 sq ft coming to the market in Q4. Examples include The Central Bank Portfolio and Block D, Iveagh Court. There is currently 3.9 million sq ft of space under construction and under refurbishment across the city centre and suburbs, which will be delivered in the next 3 years. 31% of this is currently let. Available space that is currently under construction and on the market includes Capital Dock (310,000 sq ft), Bolands Quay (200,000 sq ft), 1 GQ (135,000 sq ft), Number One Ballsbridge (135,000 sq ft), 1 WML (120,000 sq ft), 10 Molesworth (115,000 sq ft), The Exchange (110,000 sq ft), 3009 Lake Drive, Citywest (53,000 sq ft) and 5 Harcourt Road (50,000 sq ft).
Hannah Dwyer, Associate Director and Head of Research said that "It is positive to see the strong level of demand for office space continue, with an increase in take-up activity in Q4. With 660,000 sq ft of space reserved for Q1, we are expecting that Q1 2017 will be a steady start year for the Dublin office market. On the supply side, the vacancy rate remains tight, particularly in core locations and for prime space. More supply will become available in 2017 as some of the key pipeline schemes that are currently under construction are delivered."
Prime rents remain steady at €55 - €60 per sq ft, although there is evidence of quoting rents at €65 per sq ft. This is for new buildings in the city centre and there have only been a limited number of deals that have achieved this rental level.