Cushman & Wakefield, the global real estate services firm, has today announced that occupier activity in the Dublin office market improved in quarter three with a total of 44,250 sq m taken up in the quarter. This brings the year to date figure to 104,150 sq m.
Despite the improvement from quarter two which was hampered by lockdown restrictions, Cushman & Wakefield say a delay in decision making by some cohorts of the occupier market remains evident. This is most apparent in the volume of reserved space which was below average in the three-month period.
This aside, market demand is stemming from tech, professional services and state occupiers. Cushman & Wakefield say expanding tech occupiers lead the pack, accounting for almost 30% of take up year to date. Combined, the three sectors absorbed 70% of space occupied in the year to date.
Availability recorded a second quarterly increase, rising 7% in the quarter to 389,500 sq m. However, the rise was largely driven by new completions, with the release of second-hand stock to the market continuing to stay low. This perhaps again reflects the cautious nature of occupiers at present.
The upward trend in availability has unsurprisingly caused a shift in the vacancy rate. At the end of September, the total market vacancy rate was 10.1% and 7.7% in the CBD. However, excluding signed or reserved space, the CBD net vacancy rate remains low at 5.6%.
With construction sites open throughout quarter three, completions rose. A total of 42,700 sq m completed construction in the three-month period, the majority of which were new builds. A further 490,350 sq m of space was on site at the end of September and positively 53% of this space is pre-let. Over 100,000 sq m of space is ear marked to complete by year-end with over 270,000 sq m tentatively expected in 2021.
Looking forward, a total of 67,650 sq m of standing stock space is signed, with a further 259,450 sq m of space under construction also pre-let. Cushman & Wakefield say these figures reflect the market’s immediate take up pipeline and while occupier decision making is muted by uncertainty, this pre-let space provides the market with a cushion for take up levels in 2021.
Finally, prime headline rents in Dublin held stable in the quarter at €673 per sq m, however with a movement on terms evident. Downward pressure is forecast for prime rents at year-end and into 2021 as new supply hits the market and demand remains curtailed.
Commenting on the market, Head of Offices at Cushman & Wakefield Ireland, Ronan Corbett said, "It is very encouraging to see a return in occupier demand during the quarter, which is supported by the increasing level of take-up. Whilst the next few quarters are likely to be bumpy until the path of the pandemic stabalises, we believe in the medium term there is enough pent-up demand in the market to swallow up any overspill in supply."