A new report released this week by Lisney has found that international tech companies continued to dominate the capital’s commercial office market in 2017 and are expected to do so again this year.
Whilst Dublin faces a challenge to accommodate rapidly expanding international tech companies, indigenous Irish businesses are also feeling the squeeze in the city centre. Although the supply of new buildings being completed during 2018 will be more than last year, Lisney claims 68% of this space in the city centre is already pre-let.
The Lisney analysis also shows that the completion of new office buildings will increase marginally this year. An anticipated total of 189,000 square metres of new office stock will come on stream in 2018 with 37,000 square metres of this located outside the city centre. However, of the city centre space due to be completed during 2018, 68% is already pre-let or reserved.
Looking ahead to 2019, the report highlights the urgent need for construction of commercial office space to ‘ramp up’ significantly in order to keep pace with predicted demand, although only 26,800 square metres is due to be completed in Dublin city centre in 2019. To put this in context, the total 2019 city centre completion estimate amounts to less than the space Facebook currently occupy in the market.
Facebook and Google alone are on track to occupy 4% of all commercial office space in Dublin’s city centre in 2018 with their total space amounting to 38,500 and 74,600 square meters respectively.
Furthermore, with demand for office space at an all-time high, vacancy rates, which are a key benchmark of the health of the commercial property sector, are now running at a headline rate of 8.7% in Dublin (6.9% in City Centre). Vacancy rates this low have not been seen since 2000. Conclusions in the Lisney report indicate that the ferocious appetite from overseas occupiers coupled with the low level of completions is putting indigenous Irish businesses looking to rent space in the city under pressure.
Speaking at the publication of the Lisney outlook for 2018, Chairman and Head of Offices at Lisney, James Nugent said, "With almost all new office space fully let by the time it is completed, competition remains intense. There is evidence of blue-chip international companies winning out over indigenous Irish companies. In reality indigenous businesses are struggling to match the rent paying ability of overseas occupiers."