Finance, IT and legal firms were key drivers of office market in 2005

MarketReport: The Irish IT sector continues to grow apace, accounting for the largest single share of business sector take-up of office availability in Dublin during 2005.

A Dublin Office Market Report released this week by Jones Lang LaSalle also shows that Dublin 2 remains one of the most popular locations for office accommodation in the Dublin market.

The detailed study takes a close look at the current and evolving market in Dublin, including city centre and suburban developments both planned, under construction and built.

The study shows that the IT and legal sectors were key consumers of Dublin office accommodation during 2005. The business services sector collectively absorbed about a third of all space available, 61,182sq m (658,557sq ft).

Of this, just over half was taken by IT companies, providing services including outsourcing, software design, broadband supply, data security, web design and IT system design.

The legal sector took up another 28 per cent of availability, primarily made up of solicitors.

The finance sector was a large consumer of space during 2005 as well, claiming 31.5 per cent of all available space in Dublin. Banking was important here, taking 47 per cent of the total for this sector.

Dublin 2 was clearly the place most people wanted to be during 2005. The majority of take-up, 57,995sq m (624,252sq ft), or 31.2 per cent of the total, was within the Dublin 2 area. A further 39,874sq m (429,200sq ft) was absorbed in Dublin 4 and 18,271sq m (196,667sq ft) was taken-up in Dublin 1.

Collectively Dublin 1, 2 and 4 claimed 62.4 per cent of the take-up during 2005.

The M50 south region was the most popular suburban office accommodation target, accounting for 12.2 per cent of the total for 2005, which reached 186,171sq m (2,003,926sq ft).

This level of absorption was marginally down, 4 per cent, on the comparable figure for 2004, the report notes. The lion's share of the take-up, 41 per cent, came in the last quarter of 2005 with 75,856sq m (816,506sq ft) absorbed.

Dublin 2 also had the lowest office vacancy rates for Q4 2005, standing at just 7 per cent for completed stock.

This illustrated the "continued popularity and demand for office space in the city centre", the report states.

Dublin 4 vacancy rates fell to 15 per cent by the end of 2005 compared to 21 per cent at the beginning of that year.

Overall the Dublin market vacancy rate stood at 15 per cent as of Q4 2005.

The suburban rate was markedly higher at 22 per cent, with vacancy rates lowest in the M50 north area at 13 per cent.

When vacant stock under construction is considered in combination with completed stock, the overall Dublin office vacancy rate for Q4 2005 is 19 per cent, a drop from 21 per cent in the comparable period in 2004.

A total of 401,020sq m (4,316,539sq ft) of completed office space was vacant in Q4 2005, with 127,191sq m (1,369,071sq ft) in the city centre and 27,829sq m (299,549sq ft) in the suburban office market.

Completion trends show that new stock is on the way, making for a healthy supply "pipeline", the report indicates. Completion levels had a year-on-year increase of 55 per cent in 2005. In the first quarter of the year the number of new schemes coming to the market increased rapidly and, by the end of June 2005, completion levels had already exceeded those for the whole of 2004.

"This growth in size of the office market in 2005 showed a renewed confidence by developers in the sector," the report states.

Unlike the previous year, the majority (60 per cent) of new developments in 2005 were located within the Dublin suburban office market. Yet Dublin city centre still dominated the office market, as the majority of stock under construction is located in Dublin 1, 2 and 4.

There was 274,156sq m (2,950,988sq ft) of office space under construction in Q4 2005, a 22 per cent increase from Q4 2004.

No less than 96 per cent of the under construction schemes were in the city centre, the majority of this building activity in Dublin 2 and 4 with 114,795sq m (1,235,642sq ft) and 112,900sq m (1,215,244sq ft) underway respectively.

Of the stock under construction in Q4 2005, about 46 per cent was pre-let, with 49,175sq m (529,315sq ft) located in Dublin 2, 46,412sq m (499,574sq ft) in Dublin 4, and 26,532sq m (285,588sq ft) in Dublin 1.

A further 4,596sq m (49,471sq ft) of office stock under construction was sub-let in the city edge area.

Planning permissions have been granted for a further 1,125,427sq m (12,113,984sq ft) of office space in Dublin.