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Q2 2022 Dublin Office Report

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Dublin’s office market continued its recovery in Q2 with take-up reaching 501,397 sq. ft. across 59 transactions.

This is a marginal improvement on Q1 take-up and well above the 177,443 sq. ft. signed during the same period last year when the country was still in lockdown. Take-up is still low relative to pre-pandemic quarterly averages, but demand remains strong with several large requirements announced in recent months.

The largest office deal of the quarter saw US cloud computing company ServiceNow pre-letting 88,042 sq. ft. at 60 Dawson Street. Colliers represented ServiceNow on this transaction. This was followed by a letting to Workday for 53,917 sq. ft. at Dockline, Dublin 1. Workday also acquired a site in Grangegorman, Dublin 7 during Q2 which will be home to their new 550,000 sq. ft. European headquarters.

TMT is still the top performing sector, although its share of take-up fell from 56% in Q1 to 33% in Q2. There has been increased activity among financial and professional services companies, many of whom are seeking to move into newer, greener buildings. Sustainability is now critical in occupier decision-making processes and many companies cannot consider leasing an office building that does not meet internal ESG targets and policies. As a result, the gap in rental levels and void periods between the old and the new is expected to continue to increase, and older buildings will require refurbishment or redevelopment to remain attractive.

Flexibility is also a key consideration. Short-term (three to five year) leases are becoming more common and flexible space operators are reporting strong demand and high occupancy levels. Both Glandore and Pembroke Hall expanded in Q2, with Glandore leasing the newly constructed Bottleworks building on Barrow Street, Dublin 4 and Pembroke Hall leasing 5 Dame Lane in Dublin 2. This along with the continued adoption of flex models by institutional landlords such as IPUT underscores the appeal and growth potential of this office sub-sector.

Prime rents have remained stable at €62.50-€65 per sq. ft., although evidence is now emerging above this level for the very best office space in the city. With inflation and build costs continuing to increase, it is likely that we will see prime rents reaching a new high of €67.50-€70 per sq. ft. by year-end.

Overall vacancy increased slightly to 10.5% in Q2 from 10.2% in Q1. When reserved space is excluded, vacancy falls to 9.3%. The highest vacancy continues to be seen in the suburbs, where 12.9% of space was available at the end of Q2, while in the city centre vacancy stood at 9.1%. It is worth noting that close to 1 million sq. ft. of office space reached practical completion in Q2 including the partially let Exo Building in Dublin 1 and refurbished offices at Blackrock Village Centre in the South Suburbs. This was a factor in the slight increase in vacancy in Q2. Other schemes that reached completion in Q2 include One Wilton Park, Dublin 2 and Two South County, Dublin 18, pre-let to LinkedIn and Mastercard respectively. The delivery of new office space has been gradual and pre-letting remains a key feature of the market, meaning we are unlikely to see any major spikes in vacancy as new developments reach completion.

Demand has been concentrated in the city centre (Dublin 1, 2 & 4), which accounted for 78% of take-up in Q2 with the traditional CBD in Dublin 2 and 4 seeing the strongest activity. Large requirements that emerged towards the end of last year are now translating into deals. At the end of Q2, more than 1 million sq. ft. was reserved and again, the majority of this (67%) relates to offices in the city centre. It is clear from this that despite the continuation of hybrid working practices, companies still value high quality office space in a central location where staff can meet and collaborate as needed.

Despite this positive momentum in the office market, it is important to acknowledge the situation in the global economy which has the potential to impact Irish property markets. Surging inflation, including sharp increases in construction and fit-out costs, and the likelihood of further interest rate hikes are causing uncertainty among landlords, developers and occupiers in the office sector. The Irish economy is still expected to perform well this year, supported by record levels of employment, but labour shortages and rising living costs have meant that companies are struggling to attract talent. There have been tech layoffs in the US but, anecdotally at least, these are not translating to the EMEA market with many aiming to expand Dublin-based teams and take additional space to accommodate this.


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Q2 2022 Dublin Office Report

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Kate Ryan

Director | Head of Research

Dublin

Kate is Head of Research for Colliers in Ireland. Kate's role involves tracking and analysing property market data and trends and producing market reports and commentaries across all sectors. Kate is also part of Colliers EMEA research team and provides Irish market data which feeds into EMEA reports, allowing for analysis and comparison of occupier and investment trends.

Kate is an Associate Member of the SCSI and holds an MSc in Real Estate from TU Dublin. 

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Paul Finucane

Director | Business Space

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Paul  has over 19 years in years experience in the commercial property sector and joined the Colliers team in  2004 folllowing a 3 year period at Allied Irish Bank Plc. He is joint head of the offices department in Dublin  and specialises in the acquisition of office space for incoming  multi-national companies. 

In 2019, Paul acted for LinkedIn in the largest office transaction of the year where they pre-let 3 office blocks in the CBD as part of their long term expansion plans in Dublin. This success has continued into 2020 where Paul acted for Slack in the largest city centre acquiistion year to date on behalf of Slack Technologies. 

Paul is a licensed professional and a full member of the Society of Chartered Surveyors Ireland (SCSI) and Royal Institute of Chartered Surveyors (RICS)

 

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Nick Coveney

Director | Business Space

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Nick has worked for Colliers for the past 26 years and during that time has brokered some of the most complex business space transactions in the state.
He has acted as key account manager for major corporate clients entering the Irish market. and represents a significant number of International Private Investors active in the marketplace.Nick is a licensed professional and a full member of the Society of Chartered Surveyors Ireland (SCSI) and Royal Institute of Chartered Surveyors (RICS).

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Ciarán O'Connor

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Ciarán is a  Surveyor within Colliers International Business Space Department having spent two years in the Business Space Department intially and a year in the Valuation & Advisory Department. Previous to joining Colliers, Ciarán worked as a residential property manager in both Ireland and the UK.

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James Hewson

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