- "The amount of office pace taken up in the second quarter was higher than in the first quarter - 23,003 sq m of space was taken up and signed in Q2, compared to 21,000 sq m in Q1", said Joan Henry, Head of Research at Savills. "All the activity in Q2 was lettings, as was the case in Q1. While 28 deals made up the total of 23,003 sq m signed in Q2 - and this is less individual deals than the 37 lettings completed the first quarter - the size of the deals has increased. Demand remains strong for the prime and central locations, which is positive and a reflection of a continued recognition by computer and high technology firms, such as Google and Yahoo!, of the highly educated and skilled workforce available in the Dublin market", said Henry.
- "While demand in Dublin 2 remained strong in Q2 - 23% of the total amount of space taken up was in that area - there was a pick in demand for space in other locations, particularly in Dublin 1,3,7& 8. 23% of the total space taken up in the second quarter was located in Dublin 1,3,7 &8, which is a significant increase on the 16% of the total in Q1. Two relatively large lettings (of just over 4,900 sq. m between them) took place in Eastpoint, Dublin 1. In fact the total space taken up with these two lettings made up almost 22% of the total amount of space signed in the second quarter, (sq m). The two occupiers are Yahoo! and Citrix", said Joan Henry, Head of Research at Savills.
- "17% of the total amount of space taken up in Q2 was in Dublin 4, which compares to 13% in the first quarter. Once again, the technology sector is driving occupier demand, with Google taking just over 3,670 sq m of space in Grand Canal Plaza. Overall the IT/High Tech sector dominated take up in terms of overall floor space, occupying just over 50% of the 23,003 sq m taken up in Q2", said Henry.
- "Another 33,000 sq m of office space has been deal agreed so far this year, but is not yet signed. If these deals are signed by the end of Q3, it would bring the total space taken up to just over the total of 72,000 sq m for 2009 as a whole, said Roland O'Connell, Director of Offices at Savills.
- "Demand is likely to remain steady for the remainder of the year. It is now clear that the office market has bottomed out and hopefully this will encourage "fence sitter" to progress their requirements before much of the better space is gone, say O'Connell. "Those are the prime end of the market can start to think about the prospect of rental growth in 2011", said Roland O'Connell, Director of Offices at Savills.
Vacancy
Dublin 2 and Dublin 1,3,7,8 have the highest proportion of the vacant stock in Dublin accounting for 23% and 21% of the 782,500 sq m of vacant office stock, respectively.
The South Suburbs account for 19% of the total vacant office space in Dublin. This is partly due to the number of vacant office units that have been completed within the last 18 months in the Sandyford area of the city.
As we had noted in previous office reviews, the quality of the vacant stock is diminishing, as tenants are moving into newer units attracted by the favorable terms being offered by landlords - resulting in the quality of the vacant stock diminishing. Another outcome of this is that there are now few landmark buildings available for potential tenants who wish to have sole occupancy or meet their floor plate size requirement. With development of new offices coming to and standstill, options for potential new entrants to the Dublin office market will continue to diminish.
Rents
As we had predicted in our quarter one review in 2010 rents would stabilise and lease terms continue to be favourably towards tenants with extended rent-free periods and/or break options. Rents for prime city centre offices are in region of €375 per sq m, whilst rents for secondary office units/locations are in the region of €215 - €270 per sq m depending on size, quality and location of the office unit.
For more information please contact
Joan Henry
Head of Research
Savills Ireland
087 687 5066
