Total office take-up in Dublin during the first half of 2007 amounted to over 121,000 m2, a 55% increase on last year's record take-up level, according to CB Richard Ellis's latest Dublin Office Market Bulletin. 'This boom in office letting activity in Dublin, similar to that being experienced in many other European capitals at present, is being driven by unprecedented demand for new office accommodation from both indigenous and overseas companies, with business services occupiers and financial tenants being most active,' said James Mulhall, director of office agency at CBRE.
Total office take-up in Dublin during the first half of 2007 amounted to over 121,000 m2, a 55% increase on last year's record take-up level, according to CB Richard Ellis's latest Dublin Office Market Bulletin. 'This boom in office letting activity in Dublin, similar to that being experienced in many other European capitals at present, is being driven by unprecedented demand for new office accommodation from both indigenous and overseas companies, with business services occupiers and financial tenants being most active,' said James Mulhall, director of office agency at CBRE.
'The office take-up figures for the second half of 2007 in Dublin are expected to be equally strong considering that there are a number of significant lettings currently under negotiation and likely to sign in autumn', he added. There is more than 90,000 m2 of office accommodation reserved at present, with the Bank of Ireland, Arthur Cox Solicitors and KPMG among the firms looking for a new accommodation. Take-up this year will 'undoubtedly' exceed last year's record take-up of 200,000 m2,'he said.
Some 75% of the office lettings concluded in Dublin in the last three months were located in the city centre. Dublin's office market is seeing a cyclical uplift in rents, a trend that is most evident in the prime central business district of Dublin 2 and Dublin 4 where the availability of new office space continues to tighten. Unlike London, where the pace of office rental appreciation is likely to decline over the coming years in response to a surge in new supply, the development response in Dublin appears to be very controlled which should sustain stable rental growth momentum for the next three to four years at least.
The overall vacancy rate in the Dublin office market at mid-year was 10.3%. However, the vacancy rate in the central business district of Dublin 2/4 stood at 4.2%, which explains why prime rents in this district are increasing at a faster pace than elsewhere in Dublin. The report points to the fact that investors are focussing their attentions on the office sector on the back of promising rental growth prospects. However, CB Richard Ellis suggests that a lack of good quality office investment properties coming to the market in Ireland will result in the turnover of the Irish market declining this year. Irish investors will instead focus on seeking out office investment opportunities outside the domestic market.