Around 3.5 million sq ft of office space is under construction in Dublin while another million sq ft is being refurbished, according to the latest report on the city office market by agents JLL.

The study found that 41 per cent of the new space being developed has already been pre-let while a further 52 per cent of the space being upgraded has also been committed. The report forecasts that pre-lets will continue to increase as the supply of new build attempts to catch up with demand.

Office vacancy rates in the city continue to drop and have fallen from 8 to 6.9 per cent in the second quarter. Vacancy rates remain much tighter in the city centre at 3.8 per cent compared to 10.3 per cent in the suburbs.

Take-up of space in Q2 reached 536,535sq ft, an increase of 10 per cent on the figure for Q1. This brought take-up for the year to date to 1 million sq ft.

With around 800,000sq ft reserved for Q3, the availability of accommodation would decrease further in the short term, the report said. Only 6 per cent of the space (144,000 sq ft) was sub-let.

Three new office buildings would be completed this year at 21 Charlemont in Q3; Velasco in Q4; and Block H Central Park in Q4. The report said prime rents in the city centre remained strong at between €55 and €65 per sq ft and €25 to €30 in the suburbs.