Take-up of space in the Dublin office market in the past year has been “volatile” said Marion Finnegan, head of research at DTZ Sherry FitzGerald.

She said that while the first six months of the year witnessed a strengthening in activity the momentum failed to build during the third quarter as demand weakened. Early indications point to an uplift in demand in the final three months of the year.

This would bring the total quantity of space transacted in the year to about 100,000sq m (1,076380sq ft).

Ms Finnegan’s annual office review shows that demand in the Dublin market has begun to normalise following the boom years when it soared to over 288,000sq m at the peak before falling to 96,000sq m in 2009. This year’s likely take-up figure is in line with levels attained in 2010 and 2011.

While Dublin offices have shown signs of stabilisation, prospects for a broad self-sustaining expansion are uncertain due to ongoing weakness in the international economy. Supply levels remain elevated but continue to show signs of stabilisation. Notably, the supply of Grade A accommodation remains significantly lower than Grade B.

The office market, and in particular the Central Business District (CBD), continues to suffer from a deficient supply of large Grade A floor plates.

The stock of Grade A space, and in particular newly built high grade accommodation, continues to diminish due to strong take-up and has not been replenished.

The report says prime rents in the capital have stabilised at €313 per sq m (€29 per sq ft). As supply levels in the CBD decline, prime rents may not increase immediately but incentives available on existing new Grade A stock will tighten and lease flexibility diminish.

“That said, 2013 could see some isolated cases of rental inflation. However, this is unlikely to be an indicator of a wider trend in the market,” said Ms Finnegan who argued that the Dublin office market remains divided.