Fresh supplies of space, white collar employment growth, and the return of international occupiers are the factors driving the recovery in Dublin’s office market in Q3, according to BNP Paribas Real Estate.

Occupiers took 43,151 sq m of Dublin office space in Q3 this year, says a report from the company, a 162% uplift on Q2, not totally unexpected given earlier sluggishness. In fact Q3 was the busiest third quarter since 2018, with take-up levels 20% above the long-run Q3 average.

BNPPRE was itself involved in the two biggest deals of the quarter, providing tenant representation services to both BNP Paribas Bank and to Accenture for new Dublin offices at Termini in Sandyford and in Cherrywood Business Park, respectively.

Managing director Kenneth Rouse said: “Dublin’s new and refurbished contemporary office buildings are prime assets with larger footprints, the highest technology and sustainability accreditations, and excellent transport links. BNPPRE anticipates the sector’s return as a top-performing asset class in the short term.”

Despite the protracted construction shutdown and, more recently, supply-chain issues, 2021 has been a strong year for supply, the report details, and 55,000 sq m of new space was completed in Q3. 

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How well Ireland’s economy has rebounded from the Covid shock is a prime factor, as jobs in the office-employment sector were filled rapidly.

Director of research John McCartney added: “In Dublin alone, 13,300 net additional jobs were created in traditional office-based sectors, the strongest quarterly total ever recorded. Secondly, the easing of travel restrictions has enabled occupiers to get out and view properties again, helping to unfreeze pent-up demand.”

Overseas occupiers are back, too, accounting for 70% of office space taken up in Q3, a return to the trend in 2017 to 2019, when overseas entities typically absorbed two thirds of Dublin space but whose share declined in 2020 and early 2021.

The average letting picked up from 430 sq m in H1 to 830 sq m in Q3, with nine transactions of more than 2,000 sq m, taking the year to date total to almost 140,000 sq m, already about 15% more than the full-year figure for 2020. 

“With several large buildings scheduled to complete before year-end, 2021 could match or surpass the cycle-high of 190,000 sq m supply,” added executive director Keith O’Neill.

The firm is sanguine about how remote working may affect the market, though the report warns that uncertainty remains about how remote-working may affect the relationship between service sector employment and office space requirements, and seeks clarity from government on “what a safe return to office workplaces would look like, and when this is realistically likely to be possible”.

McCartney remarked: “However, what we can say with confidence is that, independent of other influences, Ireland’s rapid economic rebound and certainty on the corporation tax rate should support office demand.”

The full report is available here.