On Target For Another Bumper Year In The Dublin Office Market Despite Disappointing Q3
Dublin, 9th October 2017 – Commercial property consultants CBRE Ireland today released statistics on the volume of office lettings signed in Dublin during the nine months to the end of September, showing that more than 183,000 square metres of office lettings were signed in the capital during the first three quarters of 2017. According to CBRE, an impressive 183,630 square metres of office leasing transactions were signed in the Dublin market in the nine-month period, with more than 80% of this leasing activity having signed in the first half of the year alone.
The volume of leasing activity recorded in the third quarter specifically (33,630m2) was somewhat disappointing considering underlying activity levels with many of the leases that signed in Q3 comprising relatively small size lettings and no lettings of more than 4,645m2 (50,000 sq. ft.) signing in the quarter.
In total, 47 individual lettings occurred in Dublin in the third quarter of 2017 compared to 121 in the first six months of the year. 23 of the 47 transactions that completed in the quarter extended to less than 465m2 (5,000 sq. ft.). The volume of stock reserved at the end of the quarter at more than 100,000 square metres is very positive and bodes well for leasing activity volumes in Q4 and into Q1 2018. Financial services tenants accounted for 36% of take-up in Dublin in Q3 while tenants in the computer and high-tech sector accounted for 20% of office transactions signed in Dublin during Q3 2017. Meanwhile, the public sector accounted for 15% of leasing activity in Dublin in the quarter.
The overall rate of vacancy in Dublin fell in Q3 2017 to 6.18% while there was a slight uptick in vacancy rates in the city centre and Dublin 2/4 in the period. Meanwhile, the overall rate of vacancy in the suburbs at the end of Q3 was approximately 8% vs. 9.66% last quarter. The city centre accounted for 75% or 25,366m2 of office take-up in Dublin in Q3. Take-up in the suburbs was relatively evenly split between the west and south suburbs with no lettings having signed in the north suburbs during Q3.
Prime rents in the capital rose in Q3 2017 to reach €681 per square metre (€63.50 per sq. ft.) and are now expected to reach €700 per square metre (€65 per sq. ft.) by year-end.
The value of office investment transactions extending to more than €1 million completed in the Irish market during Q3 2017 was more than €220 million accounting for 41% of investment activity in the Irish market in the quarter. This brings office investment spend in the first nine months of the year to approximately €520 million.
On the back of recent market evidence, prime office yields in Dublin contracted by 40 basis points in the quarter to reach 4.25% at the end of Q3 2017 and are expected to strengthen a little further over the coming months. 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. With limited office stock available, CBRE are expecting to see increased focus on forward funding opportunities.#
The volume of leasing activity recorded in Dublin in Q3 was disappointing considering the bumper take-up achieved in the first two quarters of 2017. However, with more than 100,000 square metres of accommodation reserved at the end of the quarter including 5 transactions extending to more than 4,645 square metres (50,000 sq. ft.), a bumper Q4 is now anticipated, with annual take-up volumes in 2017 likely to exceed the long-term annual average for the fourth year running.
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
CBRE U.C., (CBRE Ireland) registered in Ireland, no. 316570. PSRA Licence No. 001528 is the country’s largest commercial real estate services company with offices in Dublin and Cork. Currently employing over 135 employees, we work with occupiers, investors and developers of office, industrial and logistic, retail, hotel and healthcare property, providing strategic advice and execution for property sales and leasing; tenant representation, corporate services; property and project management; appraisal and valuation; development services; investment management and debt advisory; business rates and compulsory purchase and research and consulting. Please visit our website at www.cbre.ie