Dublin office take-up down 51% in Q1 2012
Dublin, April 4th 2012: Disappointing level of take-up recorded in Q1 although underlying demand healthy. Property consultants CBRE today released their Dublin Office Bulletin for Q1 2012, revealing that office take-up in the capital was down significantly on both a quarterly and an annual measure in the first three months of 2012. In total, 32 office lettings were signed in Dublin in the quarter, with more than 24,000 square metres of letting activity being achieved in the three month period. This represents a decline of 51% compared to the same quarter last year and reflects a 32% decline quarter-on-quarter.
To download a full PDF copy of our CBRE Marketview | Dublin Office Q1 2012 please see the link below.
According to Marie Hunt, Executive Director and Head of Research at CBRE in Ireland “The deterioration in the volume of office lettings signed in Dublin in the first quarter of the year is not surprising considering the length of time it is taking to conclude negotiations at present and the fact that many corporate occupiers are curtailing their expansion and relocation requirements until such time as the economic climate is more certain. Nevertheless, there are a number of office lettings in negotiations at present and a many outstanding requirements for office accommodation in the capital which is likely to boost take-up in subsequent quarters. Indeed, overall demand for office accommodation in the capital was up more than 70% quarter-on-quarter as a result of some large requirements that emerged during Q1 2012”.
CBRE’s research indicates that over the last number of years, take-up in the first three months of the year typically accounts for approximately 20% of annual take-up in the Dublin market, which suggests that their forecast of 130,000m2 of letting activity being achieved in Dublin in 2012 is realistic. According to CBRE, more than 75% of the office lettings signed in Dublin during Q1 2012 were located in the city centre, with the Dublin 2/4 district accounting for more than half of the city centre letting activity. Large lettings in the Eastpoint development in Dublin 1 to Arvata and Google boosted the dominance of the Dublin 1/3/7 office district in terms of take-up in the first three months of 2012. These two lettings between them accounted for just less than 30% of total letting activity in Dublin in the last three month period.
14 of the 32 lettings signed in Dublin in the first three months of 2012 were to Irish companies accounting for 9,096m2 or 38% of letting activity between them; 11 lettings totalling 9,668m2 were to US companies which accounted for 40% of office take-up in Dublin during Q1 while there were 6 lettings totalling 5,148m2 equating to 21% of Q1 take-up to companies from other jurisdictions. There was only one letting signed in the city to a UK company accounting for 185m2 or 1.0% of take-up in the quarter.
Tenants in the business services sector accounted for the greatest proportion of office lettings signed in Dublin during Q1 2012, accounting for 37% of lettings in the capital in the period. The computers and high tech sector accounted for 28% of letting activity in the period. Tenants in the financial services sector accounted for 17% of lettings signed in Dublin during Q1 while manufacturing, industry and energy tenants accounted for a further 14% of letting activity in Dublin in Q1. Interestingly, neither the public sector nor professional companies signed new office lettings in Dublin in the first three months of 2012.
CBRE say that the volume of new office development completions has fallen sharply across all European capitals with no significant improvement in prospect over the next two years as weaker demand and weak rental growth, combined with limited access to funding continue to restrict speculative development across the region. Dublin remains an exception in European terms in that there is literally no new speculative office development underway or in prospect.
There were 3 office investments sold in the capital during Q1, bringing the total investment spend on offices in Dublin during the quarter to €18.5 million, equating to 92% of the total investment spend in the city in the period. Investment spend is expected to increase somewhat in Q2 and Q3 as negotiations conclude on a number of office investment properties which are currently under offer.
CBRE say that prime rents in the Dublin office market at the end of Q1 2012 were €296 per square metre and are now expected to stabilise at this level although they expect there to be further downward pressure on rents for non-prime buildings over the course of the year. CBRE say that prime office yields are now approximately 7.25%.
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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 firm (in terms of 2011 revenue). The Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE 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. 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 110 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, valuations and research. Please visit our website at www.cbre.ie or www.cbre.ie/ni.