Dublin office vacancy fell for the first time in two years during Q1 2010

According to the Dublin Office Market View Q1 2010 from property consultants CB Richard Ellis, vacancy in the Dublin office market fell for the first time since early 2008 in Q1 2010 as office take-up continued to rise and the supply pipeline remained constrained. According to CB Richard Ellis, the overall Dublin office vacancy rate fell slightly from 23.45% to 23% in Q1 2010. While vacancy rates differ across sub-markets in Dublin and the overall rate remains high compared to other similar European markets, CB Richard Ellis says that it is encouraging to see some reduction in the vacancy rate. However, they say it remains to be seen whether this downward movement is indicative of a trend considering the fact that many occupiers are vacating older accommodation in order to move to new premises.

The reduction in the vacancy rate is at least partly due to continued (but tentative) recovery in the level of office letting activity in the city. The data compiled by the research team at CB Richard Ellis suggests that the Dublin office market saw nearly 25,000 sq m of take-up during Q1 2010, a quarterly increase of 26%. This compares with the first quarter of last year, when this sector bottomed and take-up reached just over 10,284 sq m.

Willie Dowling, Director of Office Agency at CB Richard Ellis Dublin, said: “Although a number of large requirements have emerged in recent months, letting activity in the first quarter of 2010 was primarily characterised by smaller lettings, with 17 of the 36 lettings signed during Q1 2010 extending to less than 450 sq m in size. There were several larger lettings completed in the last three months as well, however, with two of the largest lettings signed in the last three months occurring in the suburbs and accounting for more than 8,000 sq m of total take-up between them. We expect take-up this year to be at least at the level seen last year – around 78,000 sq m - and based on the recovering demand seen in the form of new requirements for office accommodation activated over the past several months, we are confident in that prediction. ”.

Patrick Koucheravy, Property Economist at CB Richard Ellis Dublin, said: “The reduction in the overall vacancy rate and the changing character of Dublin’s vacant office stock is as a result of several underlying trends: first, existing occupiers are exercising break options, leaving older stock behind and moving into new, Grade A accommodation; second, new entrants to the Dublin office market accounted for 43% of take-up in Q1, removing more than 10,600 sq m of vacant stock from the market; third, a considerable amount of stock under construction is pre-let and will not enter the vacancy calculation. We expect further stabilisation or improvements in the vacancy situation over the next several months, if take-up continues at the current levels, but the vacant stock that remains will increasingly be older and located in less-desirable office districts.”