• 2016 - a year of surprises for the real estate sector with Brexit, the US election and Budget tax changes particularly topical
• Phenomenal activity in all occupier markets on the back of strong job creation numbers and favourable demographics
• Very strong rental growth achieved in all sectors of the Irish market
• Investment & hotel spend surprised on the upside
• 2017 - A combination of seismic events has muddied the waters, to the extent that the trajectory of the Irish real estate sector remains somewhat uncertain
• Ireland is expected to see economic growth of at least 3.5% being achieved this year compared to 2% in the US and 1.6% in the UK
• Further easing in total returns from Irish commercial real estate in 2017 with income supporting growth in the absence of yield compression
• Office take-up in Dublin during Q4 2016 reached 73,707m2 bringing total take-up in 2016 to 246,084m2 – almost exactly matching last year
• 76 individual office lettings completed in the capital during Q4 2016 bringing the total number of office lettings signed in Dublin in 2016 to 264
• 5 pre-letting transactions signed in Q4 2016
• 43 of the 76 transactions signed in Q4 were lettings to Irish companies with a further 13 lettings to US companies and 7 lettings to UK companies
• 3 lettings of over 4,645m2 (50,000 sq. ft.) completed in Q4
• 27% of office take-up in Dublin in Q4 2016 occurred in the suburbs
• The overall rate of vacancy at the end of the year was 6.61%
• The Grade A vacancy rate in Dublin 2/4 at the end of Q4 was 2.35%
• Prime rents rose again in the quarter to reach €673 per square metre (€62.50 per sq. ft.) having increased by 14% year-on-year
• Prime office yields remained stable at 4.65% at the end of Q4
• Offices comprised 31% of investment in the Irish market in 2016
• Take-up in the Dublin industrial sector reached 77,815m2 in Q4 2016, bringing total take-up in 2016 to 289,945m2
• Year-on-year take-up in this sector is down 32%, primarily due to a shortage of new stock to satisfy demand
• Lettings of industrial buildings accounted for 36% of industrial take-up in Dublin in the quarter and 52% of total industrial take-up in Dublin in 2016
• In total, there were 47 industrial transactions signed in Q4 2016 of which 24 comprised lettings and 23 comprised sales
• In total, there were 183 industrial transactions signed in the Dublin market in 2016
• Prime industrial rents in the capital rose further in Q4 reaching €94 per square metre - a phenomenal 25% uplift year-on-year
• Industrial properties accounted for only 2% of totalIrish investment spend in 2016 and 2.6% of investment spend in Q4 specifically
• Prime industrial yields remain stable at 5.5% at the end of Q4
Despite reports to the contrary, Dublin has more than enough office stock in the pipeline to cater for any additional demand from Brexit relocations.
Dublin office market extends to > 3.7million m2 (40m sq.ft.) of which > 60% is located in the city centre.
Annual average take-up is approx. 172,000m2 pa (1.85m sq. ft.) & the overall vacancy rate is now in the region of 7.6% which compares well with other competing cities.
As at end Q3 2016, when buildings that are reserved are excluded, there is almost 285,000m2 (1.65 times annual average take-up) of office accom. available to let in the capital, contradicting the view that there is no office stock available.
In addition to the vacant stock, there is 372,637m2 (4m sq. ft.) currently under construction in the city centre in 29 individual schemes of which 22% is currently reserved.
This equates to just over 2 years supply & will add approx. 10% of office stock to the market.
19% of the >372,637m2 is due for completion in 2016 with a further 56% due for completion in 2017.
16% of the stock that is under construction & due for completion in 2017 has already been pre-let.
A further 80,000m2 of new office stock is under construction in the suburbs.
In addition 433,159m2 (4.6m sq. ft.) across 38 individual city centre schemes has a grant of planning permission & could also be commenced if required.
While a further 73,473m2 (790,569 sq. ft.) of city centre stock has applied for planning permission.
In summary, the visibility on potential delivery should give comfort to potential occupiers that Dublin is more than capable of providing sufficient high quality office accommodation if /as required.
Government must now ensure that there is sufficient housing & adequate infrastructure to facilitate this additional demand, if and when it materialises.