Demand for office space in Dublin has fallen sharply on a back of a global slowdown in tech and as more employees opt for hybrid working conditions, according to CBRE.
In its latest quarterly report on the capital’s office market, the firm noted that take-up of office space had totalled 26,437sq m in the first quarter of 2023, down 42 per cent on the same three-month period last year.
The total was also 54 per cent below the 10-year average of 57,000sq m. The latest figures come amid a global slowdown in commercial real estate linked to higher interest rates.
CBRE’s report linked the fall-off in Dublin leasing activity to the several wider trends.
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However, it said that despite a slowdown in the technology sector, the outlook for the Dublin employment market “remained positive” while noting the first quarter of the year tended to see lower levels of activity.
“While this is a substantial fall, we do not believe it to be symbolic of what to expect for the coming year,” it said, also noting there was “there is a significant amount of office stock reserved at the end of Q1 (approximately 65,000sq m) and a number of large requirements in the market at present,” it said.
“As such, we expect take-up to increase as the year progresses,” it said.
A total of 46 office transactions completed in the first quarter which CBRE said was largely in line with the long-term average.
The largest deal of the quarter was DataDog’s relocation from 13-18 City Quay to One and Two Dockland Central, where it agreed an eight-year lease for 4,000sq m across the two buildings. The second-biggest transaction was tech firm Pinterest’s pre-letting of 2,577sq m at 60 Dawson Street.
“While there was an absence of any ‘mega deals’ this quarter, there were several smaller deals at some of Dublin’s most notable office buildings, including: both One Park Place and Three Park Place, 2 Windmill Lane, Number 1 Ballsbridge, The Reflector and 20 Kildare Street,” CBRE said.
Technology occupiers accounted for more than half of all take-up in the first quarter “despite the negative sentiment surrounding the sector at present,” it said.
The report said the impact of a greater adoption of hybrid working in office-based employment continued to play out. “CBRE’s global Live-Work-Shop survey of 20,000 cross-generational employees identified that 80 per cent of staff desire to have some sort of remote working option in the future,” it said.
Head of office leasing at CBRE Ireland Alan Moran said: “While take-up fell sharply this quarter, there remains an encouraging amount of reserved stock.
“The trend we are continuing to see is a flight to the best-in-class office buildings. We are also seeing evidence of forward planning by occupiers who have lease events in the next two to three years, as they seek to align their real estate with corporate ESG policies.”
