2016 was a very buoyant year for the Dublin office market, with occupier activity intensifying during the year. The strength of demand for office space brought the overall volume of take up in the year, both in Dublin and in the Central Business District (CBD), to their highest levels since the onset of the downturn.
Supported by strong employment growth and FDI investment, total take up in Dublin in the 12 month period reached approximately 261,000 sq m, 15 per cent higher than 2015 levels and significantly ahead of the long-run annual average.
The single biggest concern in the market during 2016 continued to be the shortage of Grade A space, with the supply/demand imbalance deepening as the year progressed and becoming particularly acute in the CBD. As a result, the net vacancy rate stood at a record low of 3.9 per cent, with less than 44,000 sq m of net Grade A space available.
A combination of rising demand and limited supply resulted in modest upward pressure of 4.6 per cent in office rents in Dublin’s CBD, increasing to €619 per sq m at year end. Cushman & Wakefield forecast that rents will rise to €646 per sq m during 2017.
It was also a significant year for the Dublin office market in terms of development. Over 31,000 sq m of office accommodation was delivered in Dublin during the year, which was the first wave of office development in the city since 2011. Notably, there is an additional 373,000 sq m of office space under construction in Dublin today. This is critically important to satisfy demand pressure and stabilise rental growth. With approximately 230,000 sq m due to be completed by end 2017, the market is poised for a busy year ahead.
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