CONTACT US
Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting cushmanwakefield.com to read:%0A%0A {0} %0A%0A {1}

Low vacancy rates in the Dublin office market fuels investor demand and sets solid footing for uncertain times ahead

21/04/2020
The commercial property market began 2019 with strong levels of office leasing activity and investment turnover.  However, as the quarter drew to a close both markets entered unchartered territory as the local and global economy addresses the onslaught of Covid-19.

According to the latest research from Cushman & Wakefield, total investment turnover levels reached approximately €525m across thirty-eight deals in the three-month period, a 3% increase on the same quarter last year.

Commenting on the market in the opening quarter, Kevin Donohue, Head of Investment, Cushman & Wakefield Ireland noted; The first quarter of 2020 began very positively with a wall of capital chasing limited stock. However, due to the Covid-19 pandemic many investors have, since the end of March, put their investment requirement on hold until there is greater clarity on the short to medium term impact of Covid-19 on the global economy and local markets respectively.”.

The opening quarter saw the investment market dominated by a strong appetite for the office sector, which accounted for 64% of investment volumes. The largest transaction of the quarter was the acquisition by Google of The Treasury Building, Grand Canal Dock, located in the heart of Dublin’s Central Business District (CBD). The US tech giant, purchased the office asset for approximately €115.5m. In line with Google’s preference to own its own premises, market insight suggests the purchase will enable Google to increase its workforce by up to 1,200 employees.

Other transactions of note include, La Touche House, also located in the CBD, purchased by European based investment manager, Axa IM Real Estate for approximately €84m.

Interest in the office asset class is driven by high levels of leasing activity and particularly low vacancy rates. In quarter one, a total of 45,150 sq m of office space was taken up and an impressive 85,050 sq m was signed in the Dublin office market. At the end of March, only 323,450 sq m of space was available, equating to a vacancy rate of 8.5% and a net vacancy rate of just 4.6%. These rates translate to a 20-year lows.

Commenting on the market, Ronan Corbett, Head of Offices at Cushman & Wakefield; “The Covid-19 situation has thrown the Dublin Office market into uncertain times. However, unlike the impact of the financial crisis of 2008 – 2011, the market is entering this period on a much stronger footing. Prior to Covid-19, the market was experiencing a record low net vacancy rate coupled with robust occupier demand. Dublin is now also a much more diverse place in terms of its occupier mix. However, one sector we do see coming under pressure in the near term is serviced offices / co-working, who have been a big part of recent take-up figures. We anticipate this sector will take a little time to readjust and recalibrate post crisis, but time will tell.”

Given the low vacancy rate, construction activity continues to be an important feature of the market. New completions in the opening quarter totaled just 16,850 sq m. A large volume of space was due to be delivered in the first half of 2020, however these timelines are likely to be extended due to the closure of sites in the current lockdown period. A total of 577,650 sq m was under construction at the end of quarter, of which 54% is pre-let or reserved.

At present, prime rents in the CBD sit at €673 per sq m and are forecast to remain at this level for the remainder of the year. The forecasted yield outlook for the Dublin market in 2020 has seen a slight outward movement of prime yields, similar to the trends across other European markets. Both the rent and yield outlook will be closely monitored over the coming months and will be subject to change as the year progresses.

WANT TO KNOW MORE?

If you would like to find out more about our specific expertise, or discover how we could work with your company, please contact a member of our team – we’d be delighted to hear from you.
With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on Cookies.

MORE OPTIONS
Agree and Close
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All
SAVE SETTINGS