Sharp fall in Dublin office take-up during third quarter
THE DUBLIN office market has run into more headwinds. The space let in the three months up to the end of September fell to 16,800sq m (180,831sq ft) compared to 30,200sq m (325,066sq ft) in Q2, according to a report from DTZ Sherry FitzGerald.
Performance in the year to September had fluctuated considerably between quarters, the report said. After suffering a setback in Q1, transactions strengthened in the second quarter but momentum failed to build up during the third quarter as lettings weakened considerably.
This turned out to be the weakest quarter since the downturn. Space transacted in the year to date reveals a 23 per cent drop in activity compared to the same period in 2011. Though Dublin’s central business district (CBD) gets the highest level of inquiries, demand for CBD space is 8 per cent lower in the first nine months compared to 2011. But the CBD still manages to attract 64 per cent of all lettings.
DTZ noted that there are signs of stability in the level of office space available in Dublin. Having peaked at 811,400sq m (8.734 million sq ft) in Q2, 2011, empty space stood at 739,700sq m (7.962 million sq ft) at the end of September.
The decline in availability in the CBD continued in Q3 at an accelerated pace. In particular, grade A space receded by 13 per cent in the past 12 months and the CBD now faced a looming shortage of top quality space. Overall, the quantum of second-hand space released to market halved in Q3. The overall vacancy rate stood at 22.1 per cent at the end of September – down from 23 per cent recorded 12 months earlier.
Finally, DTZ noted that there are still no new developments under way in the Dublin market – the sixth successive quarter without construction activity. But prime rents are stable at €313 per sq m (€29 per sq ft).
Jones Lang LaSalle notes that there are only four buildings over 464sq m (50,000sq ft) developed since 1990 available in the city. It calculates that the D2 vacancy rate is 13 per cent, down from a 2010 high of 18 per cent. Jones Lang estimates that there is demand for up to 139,354sq m (1.5 million sq ft) in the market with Airtricity, AA, Novartis, Google and Vodafone all looking for space. In addition there were a couple of confidential large requirements looking at pre-letting opportunities. By comparison, 80 per cent of the lettings in the last three months were for less than 929sq m (10,000sq ft).
Another report by CBRE said that the take-up of office space in Dublin was higher than expected in Q3, 2012. CBRE reported lettings of 32,027sq m (344,735sq ft) – a figure that reflects actual lettings and space reserved. There were 51 individual office lettings signed during Q3 bringing the total volume of office take-up in the first nine months of 2012 to 86,867sq m (935,028sq ft).