The availability of office space to sub-let has always been a feature of the Dublin office market, and this so-called ‘grey; space is poised to be a key influencing factor in 2023, according to Joan Henry, chief economist and head of research at Knight Frank Ireland.

In the property adviser’s Q4 2022 research bulletin, Knight Frank notes that 2022 saw the delivery of a total of 2.4m sq ft to the Dublin office market, 81% of which was located in the city centre.

Almost 675,000 sq ft was completed in the city centre in the final quarter of the year, 73% of which is let. Of this figure, the Cadenza Building in Dublin 2 is now available to sub-let, while Fibonacci Square in Dublin 4 will be available to sub-let in due course, Knight Frank believes..

According to Henry: “Just one scheme makes up the newly delivered and available space in the city centre – One Charlemont Square, which offers 184,000 sq ft in Dublin 2. There was just over 469,000 sq ft completed in the suburban and fringe sub-markets combined in 2022, 63% of which is let.”

In Henry’s view, 2023 is set to be “more complicated”, with a number of large buildings due to be delivered at a time when a number of large city centre buildings are also available to sub-let.

In Association with

A total of 2.5m sq ft is due to complete across the whole market, 2.2m sq ft of which will be located in the city centre.

“Within that, there are multiple moving parts, with for example half of the space at 2-4 Wilton Park, which had been pre-let in its entirety by LinkedIn, being released back to the market for sub-let or assignment,” says Henry.

“Including this building as pre-let means that 28% of the space due to complete is not available. However, if the portion that is being released back to the market is excluded, then 84% of the space due to complete in the city centre in 2023 is available.”

Large buildings due to complete in 2023 which are not yet let include 390,000 sq ft at Cooper’s Cross in the North Docklands; 208,000 sq ft at Building One, College Square in Dublin 2; and 196,000 sq ft at 4 & 5 Park Place in D2.

Knight Frank concludes that these new schemes, along with 2-4 Wilton Park and other schemes on or coming to the grey market, provide the largest range of options for occupiers looking for space in the city centre since 2019.

Henry expects that the spike in supply will feed into a “lower rental trajectory”.

Of the 2.3m sq ft of space on or coming to the grey market as of January 2023, 50% of that is made up of five buildings (table above), each of which has a head tenant in the Tech sector. Just over 1m sq ft is spread across four buildings in D2 and D4 combined.

Outside of the Tech sector, Financial and Professional Services companies have also returned some space to the market.

Henry’s opinion is that the volume of grey space will disrupt the market in 2023.

“The first half of 2023 is set to be one of excess supply for short to medium term take-up and this dynamic will put pressure on prime rents,” she says.

Buildings with the highest ESG ratings, either available via the standing grey stock or due to complete in 2023, will be in most demand, according to Henry.

Photo: Facebook is expected to sub-let space at the new Fibonacci Square office building in Ballsbridge. (Pic: RollingNews.ie)