Have we reached ‘peak office’?

An increase in office stock, the switch to hybrid working, as well as job losses in the tech sector have contributed to a slowdown in the Dublin commercial real estate market, according to an industry expert.

Currently the office vacancy rates stands at 13%, up from 6% in 2016. “That’s a little bit more elevated than we’d like it to be,” says John Moran, CEO of JLL. “We like to see a market with a vacancy rate of about 10%. That’s generally where you have a reasonable balance between landlord and occupier.”

Moran tells host, Ciaran Hancock, approximately one million square feet of office space in Dublin would be regarded as difficult to let because it’s considered Grade B or lower. (Grade A is brand new, high spec and built to the highest sustainability standards.)

“I think you’re going to see Grade B space struggling; inferior space, space that can’t really be converted to better quality or it’s in an inferior location. People who have lots of older office stock will have a lot of work on their hands.”

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The tech sector slowdown has contributed to the vacancy rate, but Technology Ireland is keen to counter the narrative that the industry is in freefall.

“Companies who unfortunately had redundancies just a couple of months ago are also now looking at new hires and new areas of the business for investment,” says Director of Technology Ireland, Una Fitzpatrick. “There’s huge need for a specialised skills base, for example: AI. What we’re trying to avoid is any kind of brain drain in the sector.”

Fitzpatrick insists the recent job losses are, unfortunately, cyclical in nature. “We haven’t really seen redundancies in the sector since 2010, so it has been a very stable industry for the last 10-plus years.”