A new report by Savills Ireland has found that despite enough office space being completed to accommodate 2,700 workers, Dublin’s office stock actually contracted in the second quarter due to large-scale demolitions of older buildings.
Over 32,000 sq m of new office space was delivered in the second quarter, mostly in prime business districts such as Molesworth St., St. Stephens Green and Burlington Road. However, an even greater amount of space, almost 40,000 sq m, was de-commissioned during the same period. The net effect was to cause Dublin’s office stock to shrink by around 8,000 sq m.
The report notes continued keen demand for office space due to the strong economy and rapid jobs growth. This resulted in lettings of over 100,000 sq m in the second quarter. With demand exceeding new supply the amount of vacant space on the market reduced by 9,500 sq m and the vacancy rate now stands at 9.2% - although vacancy rates of less than 1% prevail for Grade A buildings in the best business locations. Forty six percent of office developments in the central business districts of Dublin 1, 2 and 4 are pre-let.
Head of Offices at Savills, Andrew Cunningham says, "Demand for office space across Dublin remains robust. With space in fringe locations such as Dublin 1 and Dublin 7 now being absorbed, the suburbs – such as Dublin 18 – are enjoying renewed demand from office occupiers, a trend which will continue in the short-term."
He added, "Unsurprisingly, however, demand is weighted towards the central business districts of Dublin 1, 2 and 4 – and the market is responding to this. 4.2m sq. ft. of office space is currently under development in Dublin, 83% of which is situated in the central business district. Therefore, with Dublin city centre having become so built up over the past two decades, older properties are having to make way to allow for this new development to take place."