Despite record office take up in the first quarter and Brexit concerns on the horizon, demand for office accommodation is continuing to rise strongly with technology companies among the biggest users of commercial property.
Even as existing office requirements are fulfilled, new requirements are continuing to emerge, according to property agents CBRE which noted that the volume of demand stood at more than 370,000sq m at the end of March.
And this came after the volume of office leasing activity reached a record high in the three month period with a total of 107,200sq m of transactions signed in the Dublin market. That compares to 83,493sq m of transactions signed in the same period last year and follows from 2018 which was had highest annual volume of lettings on record.
Three of the 49 transactions that completed in the first quarter extended to more than 9,290sq m (100,000sq ft) including pre-lettings to Salesforce and the Central Bank in the city's north docklands.
Ms Hunt added: "49 individual office lettings occurred in Dublin in the first three months of the year with 32 of these transactions being to Irish companies. UK companies accounted for 10 transactions in the period while there were 4 lettings to US companies."
Elevated demand
In total, the three pre-lets accounting for such a substantial amount of space in turn accounted for more than half of Dublin’s take up in the period. And while there was a significant volume of stock reserved at the end of March (150,000sq m), demand remained elevated with more than two thirds of requirements focused on Dublin city centre.
CBRE noted that there were 30 office schemes were under construction in the city centre at the end of March, extending to more than 370,000sq m.
But Ms Hunt noted that about 47 per cent of that has already been pre-let, “meaning that occupiers cannot afford to get complacent and put off location decisions in the hope that a large volume of stock will come available over the next two to three year period”.
In the three month period, computers and high tech tenants accounted for 61 per cent of take up, financial tenants accounted for 20 per cent while business services and the public sector accounted for 5 per cent. Ms Hunt noted that while Brexit is providing a boon, the tech sector is very much the driving force in Dublin’s commercial property.
Meanwhile, the overall vacancy rate in Dublin dipped to 5.39 per cent from 6.09 per cent this time last year, as did the vacancy rate in the city’s suburbs. Prime office yields remained stable at 4 per cent, although CBRE suggested they may compress in the coming months.
