Dublin Office Take-Up Reaches 477,000 sq ft in Q1 - Construction Network Ireland - Construction Network Ireland

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Published in Commercial Property on 04/04/2022

Dublin Office Take-Up Reaches 477,000 sq ft in Q1

CNI Editor reports

Take-up in the Dublin office market reached 477,000 sq ft across 40 deals in the opening quarter of the year – according to new data from property advisor, Savills Ireland – a significantly better result than Q1 2021 when just 22,000 sq ft transacted across just 7 deals. However, according to Savills, activity has a way to go before it attains pre-pandemic levels, with Q1 take-up 24% below the ten-year first-quarter average and 57% below Q1 2020.

City-centre stock remained in high demand and accounted for 81% of total space taken and for all of the top five deals, illustrative of the demand for centrally located offices as the office market recovered from pandemic. The hub-and-spoke working model popularly discussed at the onset of the pandemic appears to have dropped as occupiers pivot back to the centrally located offices.

The Exo Building on the north docklands saw was the largest deal of the quarter, as An Post leased 79,000 sq ft. When complete, the building will be the highest office building in Dublin at 17 stories. The deal drove the share of space taken by the public sector to 17%, well above the 11% ten-year quarterly average. After a fall in market share last year, accounting for 31% of take-up for full-year 2021, tech firms have made a return as the most active sector with over 220,000 sq ft leased and a market share of 47% in Q1.

The largest tech deal took place at the recently completed 10 Hanover Quay, which American fintech firm Fiserv leased in its entirety. Currently located in Clonskeagh, the deal represents the firm relocating from a suburban location to the CBD amidst plans to expand its Irish workforce by 300 employees.

John Ring, Director of Research, commented: “With office occupier employment having grown during the pandemic but strategic office decisions effectively stalled, key decisions on real estate portfolios now need to be made. We therefore believe that there is a significant amount of pent-up demand that will be released in 2022.”

Evidently, occupiers continue to focus on ESG with energy efficient offices playing an important role in the environmental segment. Grade A properties accounted for nine of the top ten deals as tenants show a clear preference for offices that meet these criteria.

John continued: “Post-pandemic clarity following the phasing out of restrictions will stabilise the hybrid office model. We expect employers to use high-quality fit-outs and centrally located space to encourage workers to return to the workplace. Face-to-face contact has proven crucial to many tasks, particularly for those that require collaboration with colleagues. Well-lit, open-plan offices with break-out spaces may particularly appeal to both employers and employees. Uncertainty remains regarding the final shape of the proposed hybrid model, but best practice will inevitably emerge over the course of 2022 as occupational theory meets practice.”