The commercial property market in Dublin posted a strong start to 2020 with investment reaching €525 million before the Covid-19 crisis hit the State, according to the latest figures from property group Cushman & Wakefield.
Strong levels of leasing activity and investment were seen in the three months to the end of March, although activity at the end of the quarter did slow down significantly as the pandemic forced the restriction of much business activity in the State.
There were 38 deals in the quarter with investment levels up 3 per cent on the previous year. The office sector accounted for 64 per cent of investment volumes.
The largest transaction in the three month period was Google’s acquisition of the Treasury Building, a deal that cost the company about €115.5 million. Another transaction of note was the sale of La Touche House, in the city’s central business district, to Axa IM real estate for about €84 million.
Kevin Donohue, head of investment at Cushman & Wakefield, noted that investors have, since the end of March, "put their investment requirement on hold until there is greater clarity on the short to medium term impact of Covid-19 on the global economy".
While investment was rising, office vacancy rates continued their decline, dropping to a 20 year lows to a net vacancy rate of about 4.6 per cent. In the three month period, more than 45,000sq m of office space was taken up and more than 85,000sq m was signed in Dublin.
Ronan Corbett, head of offices at Cushman & Wakefield, said that the Dublin office market is entering this crisis on a much stronger footing than it did the global financial crisis in 2008.
“However, one sector we do see coming under pressure in the near term is serviced offices / co-working, who have been a big part of recent take-up figures. We anticipate this sector will take a little time to readjust and recalibrate post crisis,” he said.
Cushman & Wakefield noted that the pandemic will likely extend timelines for the completion of office space. A total of 577,650sq m of office space was under construction at the end of March, of which 54 per cent is pre-let or reserved.
The company forecasts prime rents in Dublin’s central business district to remain around €673 per sq m for the rest of the year.