Office take up in Dublin increased by 60% in 2010, compared with 2009, to a level which researchers at Savills believe the market can sustain in 2011.
The international real estate advisor reports that the pace of activity picked up as 2010 progressed, particularly in Q4 which saw 44,000 sq m (473,612 sq ft) of space let. In total 67 deals were completed in Q4, an almost 80% increase in the number of deals compared with Q1.
Overall 115,000 sq m (1.2m sq ft) of office space was let in Dublin in 2010, compared with 72,000 (775,001 sq ft) in 2009 and the largest office deal of 2010 was a 10,000 sq m lease renewal by Dell in Cherrywood.
Joan Henry, head of research at Savills Ireland, says: “In 2011 we expect that the office market will be able to sustain the level of letting activity that was achieved last year. We hold the view that 2009 was the bottom of the market in terms of activity, 2010 saw stabilization and a pick up in lettings as the rental adjustments fed through.”
According to Savills, the pick up in lettings and subsequent rental adjustments, combined with the fact that the completion of new space is expected to reach only 12,000 sq m in 2011, a drop from 69,000 sq m in 2010, will see the amount of high-end quality space diminish. This, Savills says, could increase competition and rents for the remaining vacant Grade A stock available to the market in the prime city centre areas.
The current vacancy rate for the Dublin area is 23.6%, following an increase in all areas over the last year, with the exception of North and South suburbs. Newly completed buildings accounted for just under 50% of total vacancy but Savills expects prime office rents to remain stable. Roland O’Connell, director of offices at Savills Ireland, says: “Rents for only the very best office space remained stable throughout 2010 and have settled at euro 375 sq m. Whereas rents in all other categories fell during the year, we are of the view that they are now bottoming out. Incentives remain generous but will decline in the second half of 2011”.
According to Savills, Dublin continues to be a European hub for high value ICT and financial services jobs, making it an attractive location for multi-nationals. In Q4 of 2010 the financial services sector took 29% of the total space let, with both Facebook and Google taking prime Dublin office space.
For further information, please contact:
Roland O’Connell, Savills Ireland, +353 (0) 1 6181315
Joan Henry, Savills Ireland, +353 (0) 16181300
Victoria Cambridge, Savills press office, +44 (0) 2074098940