The latest Office Market report from Savills was released today. The report found that although general employment has fallen, the share of office-based employment has stayed relatively steady, which bodes well for the future.
Technology firms were, once again, the most active sector in Dublin’s office market in 2020, with Information and communications technology (ICT) accounting for the top ten deals year and 70% of take-up last year. Despite much talk about a migration from offices.
The failings of the final Brexit deal for financial services were also found to offer some opportunity to the Dublin office market, with firms that had, to date, only made a foothold presence in Dublin, now making moves to scale up their operations.
Savills contend that there is no basis for a media narrative that has dominated this year, which is possible shift away from the Central Business District (CBD) towards suburban offices. The fourth quarter share for CBDs was 63% in 2020. This demonstrates that real estate costs are not the driving metric for businesses and is evidence against the narrative that corporates will shed office space to save costs.
Experts at Savills say they are confident that a shift to a hybrid model of working dynamics, where workers do some of their work from home, won’t necessarily translate into a significant office footprint reduction, once firms allow for surge capacity for the “popular days” and office space is adapted to facilitate lower density, collaborative workspaces in the office.
The findings from the Savills report conclude that take-up of office space will be reduced in the first half of the year but emerging new demand and reserved tallies will start to rise (they already are) as many occupiers maintain their wait-and-see approach in the face of uncertainties around the final trajectory of the virus. Once vaccinations reach meaningful levels, Savills expect execution of deals into contracted take-up to scale up.
Commenting on the report, Director of Offices at Savills Ireland, Andrew Cunningham said, "If and when Covid ceases to be a relevant biohazard, many firms who would otherwise have leased space over the past 9 months may begin to look for suitable space and pent-up demand could release. As such we would expect to see take-up rise in the second half of the year after a lacklustre first half. Flexibility will be a key factor for tenants in the short term. Smaller office sizes and fitted solutions will be more in demand in the short-term as is typical after a shock, but we expect larger longer-term requirements to resume as the year progresses."
He added, "Such longer term requirements will likely focus on buildings with strong environmental credentials and maximised accessibility, on the presumption that public transport together with commutes on foot or by bicycle with their carbon reduction and health benefits will resume and increase."