Technology sector continues to drive Dublin office market demand

Supply response remains disciplined with more than half of pipeline stock now pre-let

The largest leasing transaction signed in the year to date was the pre-letting of more than 35,000sq m to Salesforce at Spencer Place in Dublin’s north docklands

The largest leasing transaction signed in the year to date was the pre-letting of more than 35,000sq m to Salesforce at Spencer Place in Dublin’s north docklands

 

The Dublin office market performed very well in 2019, boosted by several sizeable transactions, both in the city centre and suburbs of the city.

While there was an increase in demand from business services, financial services and the public sector during the last 12 months, the technology sector continued to dominate with many of the country’s largest technology firms significantly increasing their footprint during 2019.

A healthy total of 192,790sq m of transactions signed in the Dublin market in the first three-quarters of the year.

However, with a large number of transactions in legals, only some of which are now likely to sign before year end, it is expected that the annual volume of take-up in 2019 is likely to be a little lower than the record volume achieved in 2018 – the highest year ever in terms of take-up in the Irish capital.

One of the notable trends in the Dublin office market in 2019 was the reduced focus on the core Dublin 2 and 4 market.

Indeed, the largest leasing transaction signed in the year to date was the pre-letting of more than 35,000sq m to Salesforce at Spencer Place in Dublin’s north docklands.

The next largest transaction signed in the first nine months of the year was also in the north docklands – the sale of 18,775sq m at 4 and 5 Dublin Landings to the Central Bank of Ireland.

Meanwhile, in the suburbs, the letting of 16,165sq m to Facebook at the Nova Atria building in Sandyford was indicative of an increase in activity in suburban locations during the year as some occupiers moved elements of their operations to the suburbs.

Another notable trend in 2019 was increased appetite for regional offices.

Very disciplined The supply response has remained very disciplined in this cycle, which is encouraging.

Although there were 32 office schemes under construction in Dublin city centre at the end of the third quarter, extending to almost 435,000sq m between them, more than half of this stock has already been pre-let – a figure that will increase further in the final quarter as other leasing transactions sign.

As we approach year end, it is encouraging that in addition to the record volumes of leasing activity achieved in the Irish market in recent years, demand for office accommodation remains very healthy at 388,600sq m.

This provides encouragement that 2020 will see continued strong volumes of activity being recorded.

Prime quoting rents remained stable throughout 2019 at approximately €700 per sq m. Marie Hunt is Executive Director and Head of Research at CBRE Ireland