Dublin office leasing returning to pre-Covid levels
Dublin office activity has responded strongly in Q3 after a cautious first half of the year, according to new data from property advisor, Savills Ireland.
Office take-up reached 396,000 sq ft in Q3 with a total of 42 deals completed. While this is well below the long-term average of 668,000 sq ft per quarter, it represents a marked improvement on the 23,000 and 147,000 sq ft which were transacted in Q1 and Q2, respectively.
A total of 566,000 sq ft has been transacted for the year to date. Historically Q3 tends to be a quieter quarter as the summer hiatus reduces transaction volumes, however growing optimism has put this quarter’s total above Q3 in 2019 and 2020 (366,000 and 206,000).
There are encouraging signs that the market is strengthening as occupiers start to have more clarity on the post pandemic working world and government restrictions start to loosen.
Notably there is currently 1.1 million sq ft of stock reserved in Q3 2021, 22 per cent more than the 900,000 sq ft reserved at the end of Q2 2021, much of which is expected to sign in Q4.
Shane Duffy, Director of Offices at Savills Ireland, says: “After a dismal H1, the transactional evidence in Q3 has been very encouraging for the office market. By and large, headline rents have held firm as the flight to quality among occupiers becomes more evident. Occupiers are focused on securing the best options on the best achievable rental terms in line with growing ESG focus. Weekly viewing tallies throughout September have been higher than at any stage in 2019, representing a clear pent-up demand across the market. Most notably however, this quarter saw the emergence of three new requirements above 100,000 sq ft illustrating that the demand for office space among larger occupiers still remains strong.”
Professional & Technical Service firms were the most active during the quarter accounting for 31 per cent of volumes. Tech take-up was relatively low at 23 per cent, down on its five-year average of 50 per cent, however there are several large deals close to completion and new enquiries emerging that could significantly improve tech’s standing.
Indeed, one large deal set to sign imminently would completely change this quarter’s narrative, demonstrating the impact that large tech companies have on the market.
The largest deal of the quarter was Financial Services firm BNP Paribas’ 37,000 sq ft lease in Termini building in Sandyford. Accenture has the second largest deal of the quarter with its lease of Building 10 in Cherrywood (31,000 sq ft). South Dublin and the wider suburban market have seen a strong quarter as it makes up nearly 50 per cent of taken space as opposed to approximately 22 per cent of the reserved stock, which is more typical for the market, the majority of occupier interest remains in the traditional CBD.
Shane Duffy, Director of Offices at Savills Ireland, says: “As a final point, we are also increasingly seeing occupiers’ preferences focus on office stock with strong ESG credentials. While newly built grade A stock always received the lion’s share of demand relative to secondary grade B stock, there is no doubt that this differential has widened substantially in the context of occupier demand. With many firms having held off on occupational decisions during the pandemic, we expect the return to office working to accelerate demand and in particular, we would expect buildings with strong ESG credentials in good locations, of which there is limited availability, to out-perform.”