Office space for 30,000 people to be delivered in Dublin this year
Some 196,335 sq m of new office space will be delivered in Dublin this year, up 35 per cent on 2020, according to new data from property advisor, Savills Ireland.
A total of 33 office buildings, with the ability to accommodate up to 30,000 workers, will be added to Dublin’s office stock and, according to Savills, 77 per cent of these buildings are already pre-let.
Furthermore, Savills report that of the office stock that was delivered in 2020, 53 per cent is now either pre-let or agreed to occupiers, having fallen to approximately 35 per cent last year due to the uncertainty brought about by the Covid-19 pandemic, but subsequently rebounding as post-covid occupier requirements focus on new and ESG accredited stock.
Seán Ryan McCaffrey, Associate Director at Savills Ireland, says: “With negotiations ongoing on many of these 2020 buildings, we would expect this figure to rise imminently.”
Looking further ahead, Savills report that over 50 per cent of the 197,949 sq m of office space due for delivery in 2022 is already pre-let – a sure sign, according to Mr McCaffrey, that the office will continue to play a pivotal role for businesses in Ireland.
“As we enter the reopening phase of the economy, we expect to see a continued rise in demand for space, especially new environmentally friendly buildings, as occupiers start to return to the office and formulate long-term occupational strategies.”
According to Savills, this trend is not unique to Ireland. A separate report from the global property advisor predicts that office occupiers looking for quality workspace in Europe will face tough competition for the best space in the leasing market despite the most active period of new office construction in half a decade.
Newly developed offices set to complete in the region this year will provide 26 per cent more space compared with 2020. However, average vacancy rates across many cities in Europe – including Berlin, Stockholm, Amsterdam and Paris – will be below 6 per cent making them some of the most competitive leasing markets.
A new building supply of 5.2m sq m, which is distributed across 24 markets in Europe, is due to be completed this year, with a similar amount of supply (5.1m sq m) due in 2022. This is the highest level of new supply in five years.
But Savills predicts that with half of this space already committed - 54 per cent of new offices in 2021 already pre-let and 39 per cent in 2022 - any new prime space will be absorbed, based upon known levels of demand.
Prime offices will be most scarce in Berlin, which is set to have a 2.3 per cent vacancy this year, with other German cities seeing very little spare capacity. In 2021, Cologne’s vacancy rate will be 2.9 per cent, while Hamburg’s will be 4 per cent.
Savills is also seeing space constraints in Stockholm, which is registering vacancy of 5 per cent, and in Munich, where unleased office space will be 4 per cent of the market. Lisbon’s will be 7.2 per cent, London’s West End will be 7.3 per cent, while Barcelona will experience 8.5 per cent vacancy.