CBRE LAUNCHES SECOND QUARTER DUBLIN OFFICE MARKET VIEW
€60 million of Office Investments sold in Dublin
Letting activity is encouraging but medium term outlook uncertain
14th July 2010 | The Dublin office of CB Richard Ellis Group (“CBRE”), the international commercial real estate firm, today launches their second quarter Dublin Office Market View Publication, which identifies and analyses trends in the Dublin office sector from April 2010 to June 2010. The report indicates an encouraging level of letting but the medium to longer term outlook remains uncertain.
• €60 million of office investments sold in Dublin during Q2 2010, while prime office yields remain stable at approximately 7.5%.
• A healthy level of office take-up achieved in Dublin in Q2 2010, bringing total take-up in the city in the first half of the year to almost 50,000m2.
• Occupiers remain extremely cost-conscious, are focused on turnkey solutions and are showing a preference for fully fitted accommodation.
• Despite the fact that there is a large amount of vacant office accommodation in the capital, with the overall vacancy rate at 23.5% as of the end of Q2, much of this comprises floors in otherwise occupied buildings as opposed to empty buildings.
• There are no new office developments to come on stream in Dublin after the end of 2010.
• 79% of current demand focussed on city centre properties.
Willie Dowling, Executive Director at CB Richard Ellis, commented “There has been an encouraging level of letting activity in the Dublin office market in recent months and we are on target to beat last year’s take-up level of 78,500m2. However, despite the fact that transactional activity in the Dublin office market has been holding up well over recent quarters and there is a good level of active requirements, the medium to longer term outlook still remains uncertain. Further consolidation in the financial services sector is a real threat while additional Government austerity measures are concerning. The three vital ingredients for a properly functioning office market - meaningful job creation, rental growth and the availability of funding - are all unlikely to materialise for some time. In the interim, the office sector will remain primarily reliant on company expansions and relocations and with little net absorption occurring, vacancy rates will remain high”.
According to the new report, Dublin office letting activity remained consistent in Q2 2010, with 24,652m2 of take-up recorded in the period, compared with 24,954m2 of lettings signed in the first three months of the year. This represents a 6% increase in take-up levels on an annual basis while recent quarterly take-up is more than double the level of quarterly letting activity achieved in the Dublin market in 2009. There were 35 individual office letting transactions signed in Q2 2010, the majority (19) of which were lettings of 450m2 or less. Only three lettings signed in the period extended to more than 1,858m2 in size. At this point, CB Richard Ellis predicts that the Dublin office market is on target to beat last year’s level of take-up of 78,500m2. They say that there is additional demand for as much as 109,000m2 of office accommodation in the capital at present, of which 79% have a preference to locate in Dublin city centre. Prime rents in the city centre are stable at €376 per square metre although rents for secondary accommodation and office properties in the suburbs remain under downward pressure.
The combination of an uncertain economic outlook, high vacancy rates and constrained access to development finance mean that the start of the next development cycle in Dublin is still some considerable way off according to CB Richard Ellis, who point out that after 2010, there are no new office schemes scheduled to be completed in the Dublin market. The property consultants say that even through prime rents are stabilising and the economy is showing some signs of improvement, it will take some time for speculative development to resume, even if the availability of development finance improves. If developers (and those funding them) remain cautious and refuse to develop new schemes without first securing pre-lettings, this will ultimately have implications for occupiers.
“Despite the fact that there is a large amount of vacant office accommodation in the capital with the vacancy rate now at 23.5%, much of this comprises floors in part-occupied buildings, meaning the availability of new office buildings in the central business district will continue to decline over the course of the coming quarters as lettings continue to occur” said Willie Dowling.
In addition to good levels of letting activity in the office sector, the property consultants point to good demand for prime office investment properties in the capital and report €84 million in investment deals were signed in Q2, which brings total investment spend in the first six months of 2010 to €103 million. For the first time since Q2 2009 there were office investment deals in the quarter, with €60 million of office investment signed in the last 3 month period.
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About CB Richard Ellis
CB Richard Ellis 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 firm (in terms of 2009 revenue). The Company has approximately 29,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. CB Richard Ellis has been named a BusinessWeek 50 “best in class” company for three years in a row. Please visit our website at www.cbre.com.
In Ireland, with offices in Dublin and Belfast, CB Richard Ellis is the country’s largest commercial real estate services company, now employing over 100 employees and offering a full range of property services including property sales and acquisitions, leasing and management, investment, corporate services, project management, consultancy, valuations and research. CB Richard Ellis Ireland has been listed among the top 50 Best Workplaces in Ireland, 2010, for the sixth year running. Please visit our website at www.cbre.ie or www.cbre.ie/ni