According to a new report from Savills Ireland on the Dublin office market, tech firms were, unsurprisingly, the biggest takers of office space in Q3, accounting for just over 20,000 sq m or 44% of transacted space.
6,700 new jobs were created by tech firms between July and September, making Q3 2018 Dublin’s strongest ever quarter for jobs growth in the sector.
However, while Savills believes 2018 will be a record-breaking year for office take-up, 2019 is expected to be a tighter year for new supply. According to the report, new office completions of 210,000 sq m will be delivered this year, around 5% more space than is likely to be completed in 2019.
While supply will tighten next year, Dr. John McCartney, Director of Research at Savills, does not anticipate any let-up in the demand for Dublin office space “Ireland is carrying very strong economic momentum and, notwithstanding the known unknowns, the outlook remains positive. On average, forecasting institutions predict that the economy should expand by 6.9% and 4.2% in 2018 and 2019 respectively. This is very strong growth by historical and international standards which should lead to further jobs growth and absorption of business space.”
Savills systems for tracking office demand back up this view. Active requirements in the market currently stand at 448,211 square metres, suggesting that the absorption of office space will remain strong for the foreseeable future. Consequently, vacancy rates are unlikely to rise from the current level of 8.8% over the next 18 months and may even edge lower.
The office development cycle in Dublin has now been underway for nearly four years and by the end of 2018, Savills estimate 438,000 square metres of new space will have been delivered in this time.
However, when demolitions are considered, net additional space is a modest 188,000 square metres or 5% of the standing stock at the end of 2014 of 3,733,000 sqm, which is less than 2% additional stock per annum.
51.27% of all the stock that is currently under development is reserved or let – the highest level in the cycle so far, demonstrating strong demand. The figure is even higher at 54.5% for the CBD.
“On the demand-side, considering deals that have signed since the start of Q4 and the 167,800 sq m of space that is currently reserved, we expect 2018 to be a record breaking year for Dublin office take-up.”
View the full report here – https://bit.ly/2zRm3la