Dublin Vacancy Rates Hit 16% As Completions And Speculative Development Stall
Leasing is down and vacancy is up in the Dublin office market.
Take-up in the Dublin office market reached 355K SF in the third quarter, down from 411K SF the previous quarter, although the number of deals remained relatively stable at 52, according to adviser Colliers.
The average deal size also remained broadly stable at 6,800 SF but well below the long-term average.
Professional services was the top sector, accounting for 37% of Q3 take-up, followed by industrials at 14%.
The largest deal of the quarter saw Sisk/Capwell purchase the 35K SF 3007 Lake Drive, Citywest, for its own occupation.
The overall rate of vacancy increased to 15.8% in Q3, an uptick from 15.4% in Q2 and a jump from 10.4% a year ago. Grey space remains a key feature of the market and accounts for 30% of total availability, Colliers said.
The release of grey space to the market is slowing, with the total having increased by 4.5% quarter-on-quarter to 2.2M SF. If grey space is excluded, the vacancy rate stands at 11.2%.
Colliers added that there has been a notable increase in requirements of 30K SF and above across all sectors, driven by occupiers with upcoming lease events on older buildings who are relocating because of company environmental, social and corporate governance commitments.
Many occupiers are also still prioritising flexibility and are keen to minimise capital expenditures, which has supported the leasing of quality grey space in recent months, Colliers said.
No new office developments reached completion in Q3, but several large schemes are due to complete in the coming months, including Two and Three Wilton Park and Glencar House, Ballsbridge. This will drive further growth in vacancy levels in the short term.
“Speculative development has now stopped, although the planning of new office schemes is continuing,” Colliers Research Director Kate Ryan said. “At St. James’s Gate, Diageo and Ballymore have received planning permission for a major mixed-use development which will include five new office blocks.”
Workday has submitted plans for a new EMEA HQ in Grangegorman that could accommodate 3,500 staff, and Iput has submitted plans for a redevelopment at 29 Earlsfort Terrace that will provide over 200K SF.
“These schemes are unlikely to move on-site anytime soon, but the plans reflect a positive outlook for the future of the Dublin office market,” Ryan said. “The office market is clearly still challenged, but the situation is different depending on the location and quality of the office space in question. Well-located offices with strong ESG credentials should remain in demand, while older offices, particularly those in noncore locations, may need to be refurbished or repurposed to bring them up to modern standards.”
