The Dublin office market slumped by more than 66% in the second quarter due to Covid-19, according to Cushman & Wakefield, with just 14,650 sq m occupied in the three-month period, compared to the long run quarterly average of 46,200 sq m.
At the mid-point juncture of the year, take-up amounted to 60,000 sq m, a level unseen since 2013, the last of the downturn years before recovery took hold in 2014.
With take up activity on hold for much of the quarter, availability increased, rising by 10% to 364,000 sq m, a vacancy rate of 9.5% overall, or 7.6% in the Central Business District (CBD). The release of second-hand stock back to the market remained in line with the quarterly average, indicating the market is yet to see any increase of note in market churn arising from Covid-19, according to the property advisor's Q2 report.
Head of offices Ronan Corbett said: “It will be no surprise that transaction volumes during Q2 were down significantly on previous years. Covid-19 effectively paused the Dublin office market. However, as lockdown measures have begun to lift, we are starting to see a recovery in activity.
“The remainder of 2020 will be tough, but there are reasons to be optimistic for 2021. Our live demand tracker is showing over 270,000 sq m of unsatisfied active demand in the market from early July. This is a remarkable figure and shows the confidence occupiers, and in particular international occupiers, continue to have in Dublin as a location of choice.”
In Association with
Construction was also affected by the pandemic, with all activity suspended for seven weeks of lockdown. It recommenced from May 18, so that a total of 22,700 sq m was completed in the quarter, bringing year to date completions to 39,550 sq m.
A further 544,000 sq m was under construction at the end of June, of which 175,000 sq m remains on course to complete in 2020. “However, social distancing policies or reinforced lockdowns may impact the delivery of this space in full. Importantly, 44% of space due to complete this year is pre-let, with a further 16% reserved.” said Corbett
Prime Rents
In the CBD, prime rents remained unchanged at €673 per sq m. The C&W report states: “At present, modelling the outlook for future rents remains challenging. The outlook for the remainder of the year sees moderate temporary downward pressure on prime rents.
“Overall, the outlook for the Dublin office market is positive, however dotted with temporary uncertainty. The market entered this pandemic in a strong position, with vacancy rates at a critically low level. Since then, vacancy rates have increased marginally, however remain low.
“Occupiers adopting a wait and see approach to new requirements may bring a period of inertia for the coming quarters. Already we have seen the volume of space which is reserved fall, on the back of this inertia and it may further prevent, temporarily, the volume of pre-committed space from rising significantly.
“Similarly, this market pause may see further incremental rises to availability and the vacancy rate over the coming quarters as space under construction reaches completion stage.”
Photo: the 17-storey Exo Project under construction on Dublin's quays. When complete the building will add 170,000 sq ft of office space to the market. (Pic: Sam Boal/Rollingnews.ie)
