Dublin office market rebounds but take-up still below pre-Covid levels

Take-up in the Dublin office market has continued to rebound from the pandemic but remains significantly below pre-Covid levels, new data from Savills Ireland indicates.

On Thursday the property agent said that office take-up in the capital was likely to surpass 500,000sq ft in the three months to the end of December, although more deals could be signed by the end of the year, boosting the final figures. It also predicted an easing of demand early next year due to the economic slowdown.

Overall Savills expects office take-up for the full year to reach 2.25 million sq ft, nearly 50 per cent ahead of 2021 volumes but still more than 30 per cent lower than 2019 when deals for a total of more than 3.36 million sq ft were agreed.

The full-year estimate for 2022 is also slightly below the 10-year average of 2.5 million sq ft.

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Savills said the final figure could be higher if several high-profile agreements close by the year end. This includes Citigroup’s proposed €100 million acquisition of a site at Ronan Real Estate Group’s Waterfront South Central scheme beside the 3Arena. The bank is expected to pay up to a further €200 million to the Ronan Group to build out the 300,000sq ft of office space it requires for its new European headquarters.

City centre stock was “the focus of the year”, Savills said, with the top three deals of the fourth quarter all located in the central business district.

The largest letting over the three months, and the second largest of the year, was SMBC Aviation Capital’s decision to sign for all 135,617sq ft of space at the Fitzwilliam 28 scheme in the city centre last week.

The second largest letting of the quarter was accountancy firm BDO’s deal for 46,000sq ft at Bank of Ireland’s former headquarters at Miesian Plaza earlier this month. followed by Horizon Therapeutics signing for 33,00sq ft at 75 St Stephen’s Green in Dublin 2.

Savills said that despite the headwinds facing the tech industry the sector accounted for the largest slice of space taken in 2022, buoyed by headline deals such as TikTok signing for 88,000sq ft at Iput’s Tropical Fruit Warehouse in the south docklands. The financial sector, meanwhile, accounted for 22 per cent of take-up this year. while professional services took 17 per cent.

Andrew Cunningham, director of office agency at the firm, said that the market has shown resilience despite the “economic uncertainty and energy cost inflation” that has coloured the second half of the year.

“There is also positivity in the diversification of the occupier base,” he said. “Indeed, it is significant that three of the largest office space requirements currently active in the market are professional services firms, while aviation leasing and pharma have also been expanding. Although an easing of demand is expected in the early part of next year until inflation eases, the underlying base of demand from other sectors has remained resilient and will support take-up levels in 2023.”