Dublin only completed 12,000 sq m of new office space in 2011 and is planning no new office developments at all in 2012.
The news comes after demand for office space is favoured by prime locations, such as Dublin 2 (24 per cent of office take-up) and Dublin 4 (32 per cent). The weak 2012 forecast for office take-up is only 130,000 sq m, which has not helped the development situation.
Savills believe that many occupiers will leave buildings this year, but international media, technology and telecoms companies, which are leading the market at the moment, will carry on expanding.
Speaking of the market conditions, Joan Henry, Director of Research at Savills in Ireland, stated: “Letting activity in the Dublin office market was strong against a difficult funding and economic background last year and this has kept rents under pressure.
“Achieving take up at similar levels will be a challenge with many businesses under pressure to postpone office re-location decisions due to cost and demand pressures that may emerge throughout the year.”
However, letting in out of town locations has remained strong, with some suburbs letting 25 per cent of the total office space available in the final quarter of 2011. The biggest deal was the letting of 3,200 sq m of office space to MasterCard.
Speaking of market rental prices, Director of Savills Ireland, Roland O’Connell expressed: “In terms of rental prices, prime rent of Q411 showed prices at between €300-310/sqm/per annum. We expect these prices to be achieved again in 2012 for prime Grade A space as well as well located Grade B accommodation.”
Do you think Dublin should continue to develop new office space, or wait to see how the market progresses over the year?
