Dublin’s office occupier demand over the past 12 months is the second-highest in Europe compared with the previous five-year average, behind only Czech capital Prague, according to a new report from Savills.

Dublin, up 29%, trailed Prague, up 41%, but was ahead of third-place London City, at 26%, with Dublin rebounding with four consecutive quarters of stronger performance.

While Dublin continued to record the highest vacancy rate of any of the European markets included in the update, at 17.5%, Savills countered that with no further increases over the past two quarters, the market appeared to be at a “turning point.”

That view was reinforced by the fact that, despite concerns over some of Dublin’s older commercial real estate space, the Irish capital has the third-highest proportion of modern stock developed since 2016, behind only Bucharest and Warsaw.

Savills said average European office vacancy rates edged up by 10 basis points during the first quarter, reaching 8.4%, while average prime rents grew by 4.5% year-on-year. European office takeup volumes reached more than 20M SF, up 4% year-on-year. And Savills forecast a 5% increase over 2024 for the full year.

In April, human resources and payment processing giant Workday agreed to a 416K SF office letting at M&G Real Estate and Marlet Property Group’s College Square scheme in what was the largest single European office letting since 2021.

And in another recent report, Savills predicted that the Dublin office market was poised for a significant recovery in 2025, driven by falling vacancy rates, major corporate commitments and “surging demand” for top-tier office spaces. Prime office rents in Dublin rose 4% year-on-year to €65 per SF in Q4.

The adviser added that higher construction costs had squeezed the European development pipeline, while it predicted that competition among occupiers for the best space would intensify over the next two to three years as delivery of prime space becomes scarce. The adviser predicted that vacancy rates had peaked, which will support rental growth throughout 2025 and 2026.