Almost 50,000 Square Metres Of Office Lettings Signed In Q1
Dublin, 12th April 2017 – Commercial property consultants CBRE Ireland today released statistics on the volume of office leasing activity completed in Dublin in the first three months of the year. According to CBRE, almost 50,000m2 of office leasing transactions were signed in the Dublin market in the first three months of 2017 while another 50,000m2 was reserved at the end of the quarter. In total, 40 individual lettings occurred in Dublin in the first quarter of 2017 compared to 50 in the first three months of last year. There was 1 letting of more than 9,290m2 (100,000 sq. ft.) signed in the Dublin market in the first quarter of the year as well as another large transaction that extended to between 4,645m2-9,290m2 (50,000 – 100,000 sq. ft.).
The volume of demand for office accommodation rose during Q1 and stood at more than 280,000m2 at the end of Q1 up from 260,000m2 at year-end. 27% of requirements at the end of Q1 2017 are specifically focussed on the Dublin 2/4 postcode. At the end of Q1, there were 30 office schemes under construction in the city extending to almost 410,000m2 between them. 21% of the office stock that is currently under construction has already been pre-let. More than 216,000m2 of new office stock is due for completion in 2017 of which more than a quarter has already been pre-let.
Tenants in the computer and high-tech sector accounted for 41% of office transactions signed in Dublin during Q1 2017. The public sector/regulatory bodies accounted for a further 36% of Q1 take-up in the quarter while business services tenants accounted for 10% of leasing activity in Dublin in Q1. 6 of the ten largest lettings completed in Dublin during Q1 2017 were expansions while 4 were relocations.
Vacancy rates in Dublin rose in most districts in Q1 2017 but remain low with the Grade A vacancy rate in Dublin 2/4 at just over 3.0% at the end of Q1. Meanwhile, the overall rate of vacancy in Dublin at the end of Q1 was approximately 7.0%.
The city centre accounted for 80% or almost 40,000m2 of office take-up in Dublin in Q1. There were 27 individual lettings signed in Dublin city centre during Q1. 69% of office take-up in Dublin city centre in Q1 occurred in the Dublin 2/4 district specifically with a further 20% of city centre take-up occurring in Dublin 1/3/7. At the end of Q1 2017, the vacancy rate in Dublin city centre was 5.4%. Meanwhile, the vacancy rate in the Dublin 2/4 postcode at the end of Q1 2017 was 5.77%. The Grade A vacancy rate in the Dublin 2/4 district at the end of Q1 2017 was just over 3%.
There was less than 10,000m2 of office transactions signed in the Dublin suburbs in Q1 2017 in 13 individual transactions. This is down by more than 20% compared to the same quarter in 2016 although take-up will be boosted in due course as leases sign on suburban offices that are currently reserved. 72% of the office leasing activity signed in the suburbs in Q1 occurred in the west suburbs, with 18% occurring in the south suburbs and the remaining 10% occurring in the north suburbs. The suburbs accounted for 20% of overall take-up in Dublin in Q1. The vacancy rate in the suburbs stood at 9.69% at the end of the first quarter of the year. Prime headline quoting rents in the south suburbs remain stable at approximately €296 per m2 (€27.50 per sq. ft.) at the end of Q1 while rents in the north and west suburbs rose quarter-on-quarter at €188.30 per square metre and €177.50 per square metre respectively.
The value of office investment transactions extending to more than €1 million completed in the Irish market during Q1 2017 was more than €197 million accounting for 40% of investment activity in the Irish market in the quarter. In addition, almost €110 million of mixed-use transactions (some of which included office properties) were also signed in the three-month period.
The largest office investment transactions to sign during Q1 2017 included the forward funding of 13-18 City Quay, Dublin 2, the sale of an office investment at Fumbally, Dublin 8 and Block P2, Eastpoint Business Park, Dublin 3. Prime office yields in Dublin remain stable at approximately 4.65% at the end of Q1 2017 but are expected to strengthen over the coming quarters as new market evidence emerges. Investors remain specifically attracted to investment in the Dublin office sector considering the strength of underlying occupier activity, volumes of demand and the pace at which new schemes are attracting tenants. We expect this momentum to continue and offices to continue to perform well, particularly when compared to other European capitals.
There has been continued press speculation in recent weeks about financial services occupiers focussing on the impact Brexit might have on their operations and looking at locating some jobs in locations such as Dublin. It is not clear at this juncture how big these requirements will ultimately be and what the likely timing for any move might be but it seems increasingly likely that Dublin will benefit to some degree. However, it is encouraging to see that the Dublin office market continues to perform well regardless of any additional demand that may materialise as a direct result of Brexit, with 20 of the 40 transactions signed in Q1 comprising indigenous occupiers and the vast majority of leasing transactions emanating from expansionary activity.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
In Ireland, with offices in Dublin and Belfast, CBRE is the country’s largest commercial real estate services company, now employing over 165 employees and offering a full range of property services including property sales and acquisitions, leasing and management, investment, corporate services, debt advisory, project management, consultancy, business rates and compulsory purchase, valuations and research. Please visit our website at www.cbre.ie or www.cbre.ie/ni.