Significant transactions in the leasing market in Q4 of last year bucked the trend of a slowdown in the commercial office sector.

However, suburban markets have slowed and ongoing uncertainty will impact all markets, according to HWBC’s Dublin Office Review for 2022, which showed that total take-up for the year stood at 2.41M SF, almost 50% ahead of 2021.

The question remains whether the current short, sharp shock will be painful but swift, or will draw out into next year and beyond, the real estate adviser said.

Financial services firm Citi and SMBC Aviation were the standout deals in the final quarter of the year, signing for 300K SF in the north docks and 135K SF in the city centre, respectively.

HWBC reported that average prime headline rents largely remained stable at a range of €57.50-€65 per SF in 2022, while new developments on Dawson Street and Kildare Street achieved headline rents of €65-€67 per SF during the year.

However, an increase in gray space as a result of tech companies scaling back is likely to impact headline rents for 2023, said HWBC, although it pointed out that pre-committed lets were strong last year, with 78% of all new office space pre-let by completion.

“Despite what was a challenging year on many fronts, a stabilisation in rents underscores the strength of Dublin’s commercial office market," HWBC Investment Director Iain Sayer said.

"The obvious and continuing shift to assets which have ESG principles at their core is encouraging, and the high level of pre-lets show us that firms are investing in their future through their office footprint.”

Suburban activity was more subdued as rents remained stable between €30-€34 per SF. Construction of new stock in suburban areas has slowed but there were still significant deals for prime assets such as The Hive and Termini and Grafton, Dalata Hotels, NTR and Cubic Telecom all chose Sandyford for new office space.

"Just as the correction in the tech sector has been swift and painful, any recovery in stock prices, coupled with clarity on peak inflation and interest rates should see a return to investment and growth from this sector over the short to medium term,’’ HWBC Head of Offices Paul Scannell said.