Ireland’s economy continued to exceed expectations throughout 2021, supporting an uptick in office occupier activity in the final quarter. Office take-up reached more than 1 million sq. ft. in Q4 2021, making this the 8th strongest quarter on record. This brings total take-up for the year to 1.7 million sq. ft. which is on par with 2020 levels but still low when compared to previous years.
• Ireland’s economy continued to exceed expectations throughout 2021, supporting an uptick in office occupier activity in the final quarter. Office take-up reached more than 1 million sq. ft. in Q4 2021, making this the 8th strongest quarter on record. This brings total take-up for the year to 1.7 million sq. ft. which is on par with 2020 levels but still low when compared to previous years.
• There were 64 lettings completed during Q4 2021, with the average deal size standing at 16,000 sq. ft. (+74% year-on-year). The final quarter saw the completion of a large pre-let to KPMG at the planned Harcourt Square development in Dublin 2 and a letting to TikTok at The Sorting Office, Dublin 2. These deals highlight global companies’ long-term commitment to Ireland as a place to live, work and invest.
• Technology, Media and Telecommunications (TMT) remained the top performing sector, accounting for 21%of Q4 take-up or 37% of full-year take-up. It is worth noting that this is low relative to previous years, which saw TMT occupying 50% of take-up on average. This was offset by professional services companies (31%) and State entities (8%) growing their share of take-up in 2021.
• The second half of the year also saw the return of large requirements. There are at least five companies across the TMT and professional services sectors with requirements in excess of 100,000 sq.ft., with some looking to create new CBD campuses, following in the footsteps of Salesforce, LinkedIn & Meta.
• 79% of the take-up was in the city centre and 21% in the city fringe and suburbs. Despite the pandemic and ongoing discussions in relation to how working practices will be impacted; companies still clearly see the city centre as the preferred location of their offices in the medium to long-term.
• Rental levels in the greater Dublin area remain stable with quoting rents for new / pipeline Grade A stock standing at €60-€65 per sq. ft. in CBD / €35 per sq. ft. per annum in the suburbs.
• Vacancy levels have remained stable at approximately 10.5% by year-end. The pandemic delayed construction programmes and this has led to a more controlled release of new stock to the market. Encouragingly, 70% of new space delivered in 2021 was pre-let with similar expected in 2022.
• Flex space operators have seen a surge in demand with many Dublin centres now close to full occupancy. The sector is expected to expand further this year as institutional Landlords adopt flex models into their own portfolios.
• There has also been an evolution within the serviced office sector itself. In addition to the high-density ‘per desk’ model, flex operators are increasingly offering personalised office suites on a flexible basis. This is attractive to new entrants and expanding FDI companies and we have seen several deals completed in recent months on 12- to 36-month terms.
• ESG is now one of the most critical elements of the decision-making process for multinational companies. A larger proportion of lettings and occupier requirements (particularly professional services sector) relate to relocations from old to new in order to meet longer term corporate ESG targets.
This will not affect net absorption, but landlords are increasingly embarking on major renovation and refurbishment programmes on older buildings to bring them up to current standards.
• Activity should remain brisk moving into 2022, with 800,000 sq. ft. reserved and further large deals expected to reach agreement soon.
