Office take-up reaches highest level since 2007

Take-up of space in the Dublin office market has hit its highest level since 2007, according to new research.

Estate agent Knight Frank said take-up in the first half of 2015 reached 111,484sq m (1.2 million sq ft).

“The strong take-up is further evidence of growing occupier confidence in Dublin with a greater number of firms seeking to augment their office footprint as employment levels in the economy continue to expand,” said Declan O’Reilly of Knight Frank. A good example of this growing confidence is the financial services sector which accounted for 36 per cent of take-up and three of the top five deals in the first half of 2015. It even eclipsed the technology, media and telecommunications sector which has dominated the Dublin office market in recent years.

Bank of Ireland’s pre-letting of 12,031sq m (129,500sq ft) at 27-33 Baggot Street is the largest deal so far in 2015. The bank is to enter into a new 25-year lease paying €511 per sq m (€47.50 per sq ft).

Most of the demand for office space is still focused on the city centre as Dublin 1, 2 and 4 accounted for 65 per cent of take-up. Average deal size was also significantly up in 2015: it rose from 604sq m (6,500sq ft) in Q1 to an average letting of 1,301sq m (14,000sq ft) in Q2.

Vacant stock

JLL also confirmed the strong start to the year in the Dublin office market and predicted year-end take-up to reach 167,225sq m-176,516sq m (1.8m sq ft-1.9m sq ft).

“Take-up is on target to at least achieve the five-year and 10-year averages for year-end,” said Hannah Dwyer, JLL’s head of research.

Ms Dwyer said there was currently 306,580sq m (3.3m sq ft) of vacant office stock in Dublin, which meant the vacancy rate had dropped from 10.2 per cent to 8.6 per cent in Q2. The city centre vacancy rate stands at 5.2 per cent compared to 12.6 per cent in the suburbs

With take-up at healthy levels, it is not surprising that office space under construction in the city has risen to 157,935sq m (1.7m sq ft), of which 55 per cent is pre-let. There is also 92,903sq m (1m sq ft) under refurbishment.