Tech multinationals and other foreign direct investment (FDI) companies will continue to dominate the Dublin office market in 2022 despite fears that changes to the corporate tax rate would negatively impact demand, according to commercial letting agent HWBC.
HWBC's Office Review & Outlook 2021-22 forecasts that prime headline rents will continue to stabilise in the €57.50 per sq ft range and that incentives offered by landlords to entice tenants back to the office following a damaging two years for the sector will taper off.
Assuming no further variants warranting work from home orders emerge, HWBC expects demand for new or quality upgraded buildings will increase as prospective occupiers show a clear preference for "high sustainability credentials and staff amenities," with many potential tenants refusing to consider buildings with poor energy ratings.
"The technology sector and FDI continues to dominate the market in Dublin and there was some concern that the new minimum tax agreement could have a negative effect on demand," HWBC said in its outlook.
"This has not been the case and the IDA had a record year in terms of new overseas investment and job creation. In some ways, the new tax agreement could be viewed as a positive to remove uncertainty that the tax issue is now off the table."
In Association with
Looking back, HWBC described 2021 as a "bumpy year" for the Dublin office market due to low take-up in the first half, although postponements led to "a build of demand" and a strong finish to the year, with some 800,000 sq ft worth of deals reserved for 2022.
Office take-up for the full year was 1.62m sq ft, some 26% below the long-term market average at 2.2m sq ft, and 60% of leasing activity taking place in the final three months of the year.
TikTok signed contracts to take up the entire 216,000 sq ft Sorting Office in the docklands, and the social media company may have the need for an additional 250,000 sq ft in future as its ramps up its expansion plans in Dublin.
In the biggest office deal of the year, KPMG agreed to move into the former Garda HQ at Harcourt Square, taking up 288,500 sq ft with scope for an additional 26,000 sq ft, while LinkedIn added swing space at Park Place, pending the completion of its Wilton Place HQ.
The market now has a vacancy rate of 9.6%, rising to 12.9% in Dublin 4 and falling to 5.5% in Dublin 2, while a lower than expected 1.25m sq ft was completed in 2021 with a further 4.3m sq ft under construction in the central business district and 100,000 sq ft in the Dublin suburbs.
(Pic: Getty Images)
