Dublin office market take-up reached 815,000 sq ft in the third quarter of the year, more than double that achieved in Q3 2021, according to new data from Savills Ireland. This was also 78% higher than the ten-year Q3 average which bodes well for the office market.
City centre stock remained the choice of occupiers at 80% of total space taken, meaning it has accounted for at least 80% market share for four consecutive quarters. Indeed, all the top five deals took place in Dublin 1 and Dublin 2 with the remaining 20% signed in suburban assets and no space taken up in the fringe market.
The largest letting of the quarter was attributed to A&L Goodbody’s pre-let of 155,000 sq ft at 25 North Wall Quay which is being redeveloped by IPUT and will increase the floor space by 36%. The new asset is expected to achieve zero carbon and thus be Ireland’s lowest carbon office development. The firm also took 63,000 sq ft in 3 Dublin Landings for decanting of their operations during the redevelopment of North Wall Quay in what was the third-largest deal of the quarter.
These deals drove the share of take-up from professional services firms to 33% this quarter, the largest share of all the sectors. Albeit quieter than previous quarters, tech take-up was led by TikTok who signed the entire 83,000 sq ft in the Tropical Fruit Warehouse in the quarter’s second largest deal. The firm previously committed to 216,000 sq ft at the nearby Sorting Office on Cardiff Lane at the end of last year in their entry to the Dublin office market. In the fourth-largest deal, Goodbody Stockbrokers agreed to take 60,000 sq ft at 12 Dawson.
Occupiers are also taking energy efficiency into consideration with a preference for energy-efficient offices and high ESG ratings. The inclination to these assets is even more acute with the energy crisis which is exacerbating the relative cost between low and high energy consuming buildings. Indeed, the difference between old and new city centre stock has moved from €10 per sq ft to €15 per sq ft in the past year.
Shane Duffy, Director of Office Agency, said:“The activity in the Dublin Office market has picked up significantly this year following the full reopening after the pandemic. Although nervousness remains surrounding global recession/hiring freezes, interest rates and the energy crisis, the occupational market has shown continued appetite for high quality offices as illustrated by the strong year-to-date take-up figures. The market is set to end the year strongly with 1.6m sq ft of stock currently reserved, although demand could ease somewhat once these requirements are fulfilled.
“Commutes are becoming busier with a 10% increase in public transport journeys in the past month alone, according to the CSO, which represents a positive picture for office occupancy levels. As the winter months roll in, coupled with the looming energy crisis, there is potential that employees will be prompted to work from the office more often in order to offset energy bills at home.”