Pre-Lets Meant Central Dublin Offices Had A Banging First Quarter
Dublin office leasing figures dropped in the first quarter but were still well above long-term averages, with Central Dublin performing particularly well, according to data from Cushman & Wakefield.
Overall 766K SF was leased in Dublin in the first quarter — down from the exceptional 983K SF figure for the fourth quarter, but well above the 10-year average of 484K SF. The 460K SF leased in the central business district was a 38% uplift on the last quarter.
“As the Irish economy continues to grow, the demand for office space has grown with it,” Cushman Head of Offices Ronan Corbett said. “The continued dominance of the technology sector and the re-emergence of both State and domestic private sector occupiers has been a feature of quarter one.
“While headline rents have remained relatively steady, if the current rate of takeup continues, there will inevitably be pressure on rents in the near to medium term.”
Pre-let and pre-reserved space is now at its highest level in this cycle. In Central Dublin approximately 3.1M SF was under construction at the end of March, 46% of which is already committed. Two-thirds of the space due for delivery this year is already accounted for.
The largest occupation of the first quarter was the National Treasury Management Agency taking the entire 149K SF at the first phase of Ballymore's Dublin Landings in the north docklands.
Quarter one also saw online retailer Amazon finalise its move into the 172K SF Vertium Building on Burlington Road, Dublin 4.
The IT/telecommunications sector continues to rank highest, absorbing 30% of takeup in Dublin in the opening quarter, rising to 40% in the CBD. This trend is showing no signs of easing with tech giants such as Amazon, Google, Facebook, LinkedIn and Salesforce all active in the market at present. These players are not only moving within the market, but significantly expanding and swallowing up new and secondhand available space, Cushman said.
Supply levels decreased by 11.5% in the first quarter, to stand at 4.75M SF at quarter end, representing a vacancy rate of 12.4%. However, when the significant portion of availability that is either signed or reserved is excluded, the net vacancy rate falls to 7.5%. In the CBD, the net vacancy rate declined from 5.9% to 5%.
Prime headline office rents in the CBD increased by 4.4% during the first three months of the year, to €60/SF, ahead of previous peak levels. CBD rents are expected to remain stable for 2018 because of the controlled delivery of new stock.
In suburban Dublin, rents have risen to €30/SF.