Dublin office market to experience further boost in activity by year-end

As we pass the mid-year mark, the take-up of office space in the Dublin market is set to reach 1.1 million square feet (January to the end of June), with the second quarter recording a significant increase in activity.

Activity in the first quarter was affected by residual caution from 2023 which trickled into 2024, with smaller deals dominating and occupiers taking their time in finalising their requirements.

Larger deals led activity in the second quarter. The State’s purchase of Starwood’s remaining interests at Elmpark Green in Dublin 4, for occupation by the Health Service Executive (HSE), represented the largest deal of the quarter (182,000sq ft). Tech company Stripe’s decision to take 156,000sq ft at One Wilton Park was the largest tech deal, while BNY Mellon’s signing for 79,000sq ft at the Shipping Office was the largest deal by a financial services company. Leading Irish med-tech company APC took an additional 60,000sq ft in Cherrywood, a significant pre-let in the south Dublin suburbs.

Particularly interesting is the fact that almost 90 per cent of the companies that signed deals for office space in the second quarter were taking larger spaces, reflecting strong employment growth across the economy, an improvement in sentiment and more clarity on hybrid-working policies.

We continue to hold the view that while the total market vacancy rate will increase over the coming months (largely driven by a number of new buildings due to complete), it will peak close to year end at between 16 per cent and 17 per cent. The underlying vacancy rates by city centre location and building type/sustainable credentials are more complex and considerably lower.

The year 2024 will see a peak in office completions, after which the pipeline contracts sharply, with currently no new office space due to complete after 2026.

The remainder of 2024 offers occupiers who have their research done a number of options of new space, particularly in the city centre, at rents which have stabilised at €62.50 per square foot. Upward pressure on rents is expected in 2025, driven by a combination of cost pressures and increased demand.

A continued improvement in occupier activity is expected for the rest of 2024, as a number of large requirements are expected to complete by year-end.

Knight Frank forecasts that total take-up will reach close to two million square feet for the year as a whole.