Office Vacancies Turn Downward, CBRE Says, As 2-Speed Market Emerges
The second quarter was another solid period of takeup in the Dublin office market, largely driven by two major deals and major relocation decisions being made by global corporate occupiers, according to CBRE Ireland.
In Q2, takeup reached 649K SF, the strongest quarter since Q2 2024, while the vacancy rate declined to just over 17%, the first drop in three years. There were no new office completions in Q2, with just 368K SF under construction for second-half delivery.
Prime rents held steady at nearly €63 per SF and could rise to more than €65 per SF in 2025, while investment volumes reached €180M in Q2, CBRE said in a report.
Takeup totalled nearly 1.1M SF, down 3% year-on-year, with average deal size 19,600 SF and 75% of Q2 takeup for Grade A-plus buildings. CBRE said the technology sector led takeup, with a 79% share, and 88% of Q2 takeup occurred in the city centre, though active demand declined 18% to 2.1M SF.
With no completions in Q2, CBRE warned that long-term prime rents need to rise to at least €70 per SF to support new construction.
Workday completed its signing of a 20-year lease for 416K SF for its new headquarters at College Square, while the second-largest deal of the quarter saw Vodafone take an assignment of the lease for 63K SF at 70 St Stephen’s Green from Horizon Therapeutics. The U.S. pharmaceutical group had previously signed a 20-year lease in May 2021.
“The long-awaited turning point for the Dublin vacancy rate also arrived, as it declined for the first quarter in three years, a material milestone in this recovery cycle,” CBRE said in the report.
The two-speed nature of the new market means the availability of office stock needs to be contextualised, the adviser said. Despite the headline vacancy rate being just over 17%, this is not reflective of the reality of available space in the core city centre locations.
In Dublin 2, of the stock with A building energy ratings, there is just 904K SF available to lease, and that space is fragmented across several buildings. That is not a great deal of space in the context of a market that historically averages nearly 2.6M SF of takeup a year.
“The trend of landlords delivering fitted space within their portfolio is paying dividends with improved leasing velocity and stronger rents being secured,” CBRE Ireland Executive Director Alan Moran said in a statement. “The level of demand requirements and reserved stock should be supportive to continued momentum over the next six months.”
