Property consultants CBRE Ireland today released figures for the volume of office leasing activity achieved in the Dublin market in the first quarter of 2019, which shows that a total of 107,200 square metres of transactions were signed in the Dublin market in the first quarter of the year.
This represents the highest first quarter office take-up ever recorded in the Dublin market, having been boosted by a number of large transactions including a number of pre-lettings.
Forty nine individual office lettings occurred in Dublin in the first three months of the year with 32 of these transactions being to Irish companies. UK companies accounted for 10 transactions in the period while there were 4 lettings to US companies in the first quarter.
In total, the three pre-lets signed in first quarter 2019 accounted for more than half of Dublin’s take-up in the three-month period. The volume of stock reserved at the end of the quarter was almost 150,000 square metres.
Meanwhile, the volume of demand for office accommodation rose substantially quarter-on-quarter, standing at more than 370,000m2 at the end of the first quarter, which proves that new requirements continue to emerge as existing ones are satisfied. More than two thirds of requirements at the end of the first quarter 2019 were specifically focussed on Dublin city centre.
According to CBRE, at the end of the first quarter, there were 30 office schemes under construction in Dublin city centre extending to more than 370,000m2 between them. A large proportion of the office stock (47%) that is under construction in the capital has already been pre-let or is reserved, meaning that occupiers cannot afford to get complacent and put off location decisions in the hope that a large volume of stock will come available over the next two to three-year period.
By virtue of some of the larger transactions signed in Dublin during the first quarter, computers & high-tech tenants accounted for 61% of take-up in Dublin in the first quarter. Meanwhile, financial tenants accounted for 20% of take-up in the first three months of 2019 while the business services sector and the public sector accounted for 5% of leasing activity in Dublin in the first quarter 2019 respectively.
The overall rate of vacancy in Dublin fell in Q1 2019 to 5.39% from 6.09% last quarter and 5.96% this time last year. Meanwhile, the overall rate of vacancy in the suburbs at the end of the first quarter was approximately 6.21% compared to 6.66% three months ago.
The vacancy rate in Dublin city centre and in the Dublin 2/4 district fell in the quarter but increased year-on-year demonstrating that supply is coming on track in line with the very robust volumes of occupier demand being experienced.
The value of office investment transactions (extending to more than €1 million) completed in the Irish market during the first quarter 2019 was more than €322 million accounting for 47% of investment activity in the Irish market in the quarter. In addition, more than €5.1 million of mixed-use transactions (some of which included office properties) were also signed in the three-month period.
Prime office yields in Dublin remained stable at 4% by the end of the first quarter 2019 but may compress a little over the coming months as new transactional evidence materialises. Despite the yield compression experienced during 2018, prime office yields in Dublin remain higher than previous peak levels unlike most other European markets and are attractively priced compared to the rest of Europe.
Commenting on the figures, Executive Director & Head of Research at CBRE Ireland, Marie Hunt said, "It is important to point out that a large proportion of the office stock (47%) that is under construction in the capital has already been pre-let or is reserved, meaning that occupiers cannot afford to get complacent and put off location decisions in the hope that a large volume of stock will come available over the next two to three-year period."