Dublin office market rebounds but still lags pre-Covid levels
Take-up in the Dublin office market recovered strongly in the first quarter after coming to a halt last year, but still remains around 24% below the ten-year average for the period, according to news reports. data from Savills Ireland property group.
The market reached 477,000 square feet across 40 deals in the first quarter of the year, which was a significantly better result than the same period of 2021, when just 22,000 square feet were traded across just seven deals. .
However, activity still has some way to go before it reaches pre-pandemic levels, with attendance 24% below the ten-year Q1 average and 57% below the first quarter of 2020.
Inner city inventory remained in high demand and accounted for 81% of total occupied space and across all top five transactions, illustrating demand for centrally located office space as the office market recovers from the pandemic .
Savills said the “hub-and-spoke model” widely discussed at the start of the pandemic “seems to have dropped” as occupants return to centrally located offices.
The Exo Building on the North Docks was the biggest deal of the quarter, as An Post leased 79,000 square feet. When completed, the building will be Dublin’s tallest office block at 17 floors.
The deal increased the share of space taken up by the public sector to 17%, well above the ten-year quarterly average of 11%.
After a fall in market share last year, representing 31% of take-up for the whole of 2021, technology companies have once again become the most active sector with more than 220,000 square feet leased and a market share of 47% in the district.
The biggest tech deal was at the recently completed 10 Hanover Quay, which US fintech firm Fiserv has leased in its entirety.
Currently located in Clonskeagh, the deal represents the company moving from a suburban location to the CBD as part of plans to increase its Irish workforce by 300 employees.
Savills Director of Research John Ring said: “With office occupier employment having increased during the pandemic but strategic office decisions effectively stalled, key decisions on property portfolios must now be made.
“So we think there is a significant amount of pent-up demand that will be released in 2022.”
Savills said occupiers continue to focus on ESG, with energy-efficient offices playing an “important role” in the environmental segment. Grade A properties accounted for nine of the top 10 deals, with tenants showing “a clear preference” for offices that met those criteria.
“Post-pandemic clarity after restrictions are phased out will stabilize the hybrid office model,” Ring said. “We expect employers to use high-quality amenities and centrally located spaces to encourage workers to return to the workplace.
“Face-to-face contact has proven to be crucial for many tasks, especially those that require collaboration with colleagues. Open, well-lit offices with lounging areas can particularly appeal to employers and employees.
“Uncertainty remains as to the final form of the proposed hybrid model, but best practices will inevitably emerge over the course of 2022 as working theory meets practice.”