There has been a strong rebound in Dublin office lettings, but a surge in supply in driving vacancy rates higher.
New data from BNP Paribas Real Estate Ireland shows that 86,250 sq m of office accommodation was taken-up between April and June.
This is the highest figure for two and a half years, and surpasses the ten-year quarterly average of 60,000 sq m for the first time in six quarters.
Today’s report states that the quality of lettings is improving, with new entrants and expansions accounting for a higher share of take-up over the last year.
It states that this contributes more to overall office consumption than tenants moving within the market, from one building to another.
According to the report, the rebound is in part due to changing working conditions.
The report states that while the proportion of employees working remotely has remained steady at 34% since the third quarter of 2022, those that are doing so are gradually spending more time in the office.
According to BNPPRE Director of Research John McCartney, demand conditions are as positive as could be expected given the relative inactivity of tech firms.
He said the bigger challenge comes from the supply-side of the market.
“Nearly 140,000 sq m of new stock has been added in the first half of 2024 and a further 17 buildings, incorporating 250,000 sq m, are scheduled to complete before the end of next year,” he said,
“This is a lot of space for a small market like Dublin to digest and vacancy will therefore rise further, despite the leasing cycle having probably now passed rock-bottom,” he added.
The report states that strengthening demand is unable to keep-up with the supply surge, with the vacancy rate rising to 15.2%.
It expects the supply pipeline will drive the vacancy rate to between 16.5-17% by the end of 2025.
Article Source – Rebound in Dublin office lettings, but vacancy still rising – RTE
