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Dublin’s commercial real estate assets are less at risk of obsolescence than in many other European cities because many of the buildings are relatively new, according to a new report from Cushman & Wakefield.
Its Rethinking European Offices 2030 report examines office stock across 16 major European cities, including the Irish capital, and the opportunities for landlords to reposition or repurpose their space. By 2030, Cushman & Wakefield estimates that more than 1.8B SF of office stock is at risk in the 16 European cities analysed.
Yet while several Western European markets faced estimates of nearly 80% of total stock at risk of obsolescence — including Milan, Barcelona, Stockholm and Paris — Dublin’s threat ranked 12th out of the 16 cities at 64%. By contrast, London stood at 76%, according to the findings.
Only Munich, Prague, Budapest and Warsaw performed better than Dublin, which Cushman & Wakefield put down to the fact that most of the space has been developed relatively recently in Dublin, with a higher proportion of stock constructed over the past two decades compared to other Western European markets.
However, despite the relatively robust state of Dublin’s real estate stock, the city has one of Europe’s highest office vacancy rates at 15.7%. Although slowing, a considerable pipeline of new office construction — more than 344K SF of new space was completed in the third quarter — is likely to push vacancy higher in the short term.
Cushman & Wakefield said repositioning assets to improve their quality is likely to be the optimal solution in those central business district locations that have strong demand for best-in-class space, relatively lower vacancy and premium rents being achieved. However, in noncentral locations, higher vacancy is driving a widening discount in values, and repurposing may be the best option.
“Across Europe there is continued strong demand for offices, but tightening sustainability regulations, shifting workplace strategies, and economic pressures mean property owners and investors must act now to prevent their assets from losing value,” Cushman & Wakefield Head of EMEA Office Research Nigel Almond said in a statement. “We will see continued changes over the remainder of this decade and beyond with three main factors – carbon, community, and cost — driving the direction of obsolescence.”
“We anticipate a growing divide between best-in-class centrally located assets and those in peripheral locations where vacancy risk is often greater,” Cushman & Wakefield Head of Flexible Workspace for EMEA Emma Swinnerton said. “Landlords need to understand their assets, and the context in which they exist, to determine whether repositioning or repurposing is the best strategic approach.”
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