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Published in Commercial Property on 21/12/2020

Vaccine Injects Some Confidence in Office Market

CNI Editor reports

Progress on the development of Covid-19 vaccines helped boost inquiries about space to let in Dublin’s office market in recent weeks.

This comes as lettings in the final quarter increased by 40,000 sq ft to 270,000 sq ft. compared to the previous quarter.

While both quarters were substantially down on the 817,000 sq ft of lettings in the first quarter of the year, the market is taking encouragement from the recent upward trend after lettings fell to 83,000 sq ft during the second quarter lockdown. Full year lettings are estimated at around 1.4 million sq ft.

Declan O’Reilly, director at Knight Frank, said the vaccines “acted as a tipping point for companies to plan for a return to the office and to consider their future office requirements which should provide the market with a reason to be optimistic that a stronger performance is on the cards in 2021”.

Amazon has been expanding rapidly in Dublin during the last few years and this deal brings its footprint in the capital to just over 343,000 sq ft. This will grow by a further 170,000 sq ft when McGarrell Reilly’s Block 2, Charlemont Square completes in the first quarter of 2021 – a building which the company pre-let at the end of 2019.

Another Big Four tech firm Microsoft had taken 43,918 sq ft in IPUT’s 3 Dublin Landings in the third quarter.

In terms of the remainder of activity in Q4, the financial services sector was also a significant driver in the market. Rabobank took 23,500 sq ft at TIO’s 76 Sir John Rogerson’s Quay. Reflecting Hines’s increased development activity in Dublin, the US firm took 11,250 sq ft at Hibernia Reit’s Central Quay. Another international investor Pimco took 11,065 sq ft at the Harcourt Building which it sub-let from Investec.

The State was also active as the HSE sub-let 43,668 sq ft at One Heuston South Quarter from Eir.

Mr O’Reilly sees the Amazon deal and rollout of vaccines as pointing to a significant recovery in activity in 2021 which will be led by tech firms.

Tik Tok – who’s parent company Bytedance is the highest valued unicorn in the world – recently announced that it is seeking 500,000 sq ft of space in Dublin to facilitate a major expansion of its operations here.

“We anticipate that they will begin satisfying this requirement next year which will represent a significant fillip for the market. We also expect strong demand from finance and professional services firms,” Mr O’Reilly said.

REF: Independent