Analysts predict good year for Dublin office market

Demand for office space in Dublin in the first three months of 2011 has been strong with take up reaching 45,500 square meters, up 2% on the previous quarter and twice the level seen at the same time last year.

An analysis from international real estate advisor Savills predicts that take up could total 150,000 square meters by the end of the year, reflecting a healthy demand for prime office stock in the Irish capital.

According to the firm a 0.4% drop in the overall vacancy rate in the first quarter of 2011 compared with the previous quarter, to 23.2%, is due to a shortage of new office space and continued increase in take up.

'Demand for office space in the first three months of the year has been strong. The fall in vacancy rate reflects a combination of factors, in particular a consistent level of demand for space since the middle of 2010 and a halt in the amount of newly completed space coming to the market, especially grade A space in prime locations,’ said Joan Henry, head of research at Savills Ireland.

The research shows that four major deals made up almost 70% of total space taken up in the first quarter of 2011, with Google’s purchase of the new 19,000 square meter Montevetro office building accounting for 42% of total space.

Apart from this investment Savills reports that the remaining first quarter transactions were all lettings, with 36 deals completed compared with 67 completed deals in the previous quarter. However the average square meterage of completed deals in the first quarter of 2011 was almost double that of deals completed in the fourth quarter of 2010.

‘We expect demand for space to remain consistent as existing occupiers look for opportunities to move to better locations on more favourable terms and conditions,’ said Roland O’Connell, director of office agency at Savills Ireland.

‘The continued interest and demand from multi nationals, particularly in the IT and financial sectors, recognizes Dublin’s competitiveness as an important business centre. All these factors bode well for a continued recovery in the city’s office market in 2011 and our expectation is that take up could reach 150,000 square meters by the end of the year,’ he added.

Savills expects prime Dublin rents to remain stable at around €350 to €375 per square meter per year.