TAKE-UP OF office space in Dublin for 2009 looks like being back at levels last seen in the early part of the decade, according to a new report from agent HWBC.
Take-up for this year is likely to be less than 70,000sq m (753,473sq ft), representing a major readjustment for the sector.
The volume of space being let recovered in Q2 2009 to post a half yearly total of 27,696sq m (298,117sq ft) – a drop of 48 per cent on the last six months of 2008. The market had been contracting for the four quarters since the middle of 2008 and may have reached a low point in Q1 this year.
Paul Scannell of HWBC’s office department said the office market was readjusting pricing levels and lease structures to remain competitive. This process is well underway with rents falling across all sectors and greater lease flexibility available to tenants. With cost savings to the fore, tenants were now voting with their feet and activity in the suburbs so far this year accounted for 51 per cent of overall lettings.
The report said that the current identified demand was estimated to be 65,000sq m (699,655sq ft) with most tenants seeking less than 1,000sq m (10,764sq ft). There had been a drop in the size of tenant requirements. Statistics bore this out with 57 recorded transactions in the first six months of 2009 showing an average deal size of 500sq m (5,382sq ft). The vacancy rate had breached 20 per cent.
The agency estimated that of the 224,000sq m (2.4 million sq ft) of space available in D2 and D4, 43 per cent was Grade A.
HWBC said that it expects virtually no new speculative starts over the medium term until current stock is cleared and funding conditions improve.
While rents would remain under pressure HWBC does not foresee significant reductions as a major correction has already taken place and overall rents appeared to be bottoming out. It said that prime headline rents now ranged from €400–€480 per sq m (€37.2–€44.6 per sq ft), down from a high of €650 per sq m (€60.4 per sq ft). Secondary space is now letting at €200–€300 per sq m (€18.6–€28 per sq ft).
