Bumper Q4 brings 2015 annual office take-up in Dublin back to peak levels
Dublin Office Marketview Q4 2015
Dublin, January 14th 2016 - According to the latest research from property consultants CBRE Ireland, 75,231m2 of office leasing transactions (55 transactions) were signed in the Dublin market in the last quarter of 2015. This brings total take-up in the capital in 2016 to 248,944m2, which is an impressive result and brings the ten year annual average volume of take-up in the capital to more than 177,00m2 per annum. Q3 take-up was boosted by the signing of three large lettings in excess of 4,645m2 (50,000 sq. ft.) during the period, including a letting of 8,815m2 to Workday at The Kings Inn building in the Dublin 1/3/7 district; a letting of 8,361m2 to ESB International at One Dublin Airport Central in the north suburbs and a letting of 6,127m2 to Accenture at 7 Hanover Quay in the Dublin 2/4 district.
With several large requirements fulfilled during the year, the overall volume of demand declined to approximately 200,000m2 at the end of the fourth quarter compared with more than 248,000m2 three months previously. Despite the fact that prime rents have increased significantly in the city centre during 2015, 44% of requirements at the end of Q4 2015 were specifically focussed on the Dublin 2/4 postcode. Meanwhile, at the end of the year, 12.5% of requirements were focussed specifically on the south suburbs.
Click here to dowload the full report | CBRE Ireland Dublin Office Marketview Q4 2015
According to Marie Hunt, Head of Research at CBRE Ireland, At year-end 2015, there were 23 office schemes under construction in the capital, extending to more than 270,000m2 between them. However, almost one third of this stock has already been pre-let. The remainder equates to just less than the annual average volume of take-up achieved in the capital over the last 10 year period. Only 92,308m2 of office stock is due for completion in the capital in 2016 with more than half of this stock already committed suggesting that supply shortages will prevail for some time yet despite an increase in development activity in this sector. Speed to market by 2018 will be a recurrent theme and we will see considerable focus on the timeline of delivery of the many schemes that are in various stages of the planning process. While there are no immediate concerns about oversupply, it is important that we keep this under review as the year progresses and consider every scheme on its own merits but also in the context of the overall space being delivered to the market.
Tenants in the computer and high-tech sector accounted for 37% of office transactions signed in Dublin during Q4 2015 and 39% of lettings in the capital in during the year. Financial services tenants accounted for only 4% of Q4 take-up (and 15% of annual take-up in 2015) while business services tenants accounted for 21% of leasing activity in Dublin in the last three month period and 15% of leasing activity during 2015. 7 of the ten largest lettings completed in Dublin during Q4 2015 were expansions, 2 were relocations while one of the lettings was a new entrant.
The value of office investment transactions of greater than €1 million completed in the Irish market during Q4 2015 was more than €300 million accounting for 24% of investment activity in the Irish market in the quarter. In addition, more than €300 million of mixed-use transactions (some of which included office properties) were also signed in the three month period. This brings total investment in office properties in 2015 to €1.69 billion. 48% of the €3.5 billion total investment in the Irish market in 2015 comprised office properties specifically while several other office properties were traded as part of mixed-use portfolios. In addition, many office properties traded by way of loan sale during 2015. The largest office investment transaction to sign during Q4 2015 was The Bloodstone building on Sir John Rogerson’s Quay in Dublin Docklands, which sold for approximately €70 million. Prime office yields in Dublin remained stable at approximately 4.65% at the end of the year according to CBRE, who earlier this week launched the 27th edition of their Outlook 2016 report containing their predictions for all sectors of the Irish commercial property market for 2016. www.cbreoutlook2016.com
Alan Moran from the Office Agency department at CBRE said Vacancy rates in Dublin fell again in Q4 2015 with the Grade A vacancy rate in Dublin 2/4 at approximately 1.10% at the end of Q4. Meanwhile, the overall rate of vacancy in Dublin is now 8.74% having fallen into single digits (9.29%) for the first time in 15 years last quarter. Prime headline quoting rents rose to €592 per square metre (€55 per square foot) by year-end as had been forecast and are set to increase further in 2016 as supply shortages prevail until new stock is delivered.
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.