April 3, 2020

Dublin, 2th April 2020 - Commercial property specialists CBRE Ireland today released their Dublin Office Market View publication for Q1 2020, which shows that despite the fact that some office requirements are being put on hold in the current climate, the first quarter of 2020 was healthy and it will be Q2 before any material impact will be evident from a transactional viewpoint.

Dublin Office Take up Q1 2020

According to CBRE, almost 100,000 square metres of office leasing transactions were signed in the Dublin market during the first quarter of 2020. While down approximately 7% on the record volume of transactional activity recorded in the first quarter of 2019, the volume of leasing activity achieved in Q1 is actually 50% higher than the 5-year average for Q1 office take-up in the capital. Indeed, boosted by a number of large lettings that signed in the first three months of the year, Q1 2020 saw the second highest volume of Q1 take-up in a decade being achieved in the capital following last year’s record Q1 performance.  There was more than 88,000m2 of office accommodation reserved at the end of the quarter which CBRE say should provide somewhat of a cushion in Q2, when Covid-19 uncertainty is expected to make its presence felt.

There were 5 pre-letting transactions signed in Q1 2020 that accounted for 31% of Dublin’s take-up during the quarter. 12 of the 31 office transactions signed in Dublin during Q1 were to Irish companies, accounting for 39% of Q1 take-up between them. Meanwhile, there were 14 transactions to US companies completed in Q1, accounting for 45% of leasing activity in the quarter. In addition, there were 2 lettings to UK companies signed in Q1 2020. 56% of leasing activity in Dublin in Q1 occurred in the city centre with 99% of city centre take-up occurring in the Dublin 2/4 postcode. Meanwhile, the largest office transaction signed in Q1 was located in the south suburbs.

CBRE noted a 21% decline in the volume of overall demand for offices quarter-on-quarter with overall demand standing at approximately 340,000m2 at the end of Q1.

"This is still a very healthy volume of demand.Part of the decline in demand quarter-on-quarter can be attributed to some requirements being fulfilled during the last 3-month period. However, some requirements have also been put on hold in recent weeks as occupiers put off decision-making and adopt a ‘wait and see’ approach with regard to expansions & relocations to focus on their core operations and business continuity."
Marie Hunt, Executive Director and Head of Research at CBRE Ireland

74% of requirements at the end of Q1 2019 were specifically focussed on Dublin city centre.

According to the property consultants, at the end of Q1 before non-essential construction was officially curtailed by Government, there were 34 office schemes under construction in Dublin city centre extending to more than 470,000m2 between them, of which 48% had already been pre-let. With construction now halted for the foreseeable future, CBRE expect the completion dates on many of these office schemes to move out by at least 3 months.

Lettings to computers and technology tenants accounted for 51% of take-up in Dublin in Q1. The financial services sector accounted for 25% of leasing activity in Dublin in the quarter while the business services sector accounted for a further 14% of take-up in Q1.

All of the 10 largest lettings completed in Dublin during Q1 2020, six were expansions while 4 comprised relocations.

The overall rate of vacancy in Dublin remained relatively unchanged quarter, standing at 5.06%, at the end of Q1, compared to 5.05% last quarter.

Prime rents in the city centre remain stable at €700 per square metre (€65 per sq. ft.). While some office landlords will be asked to consider rent abatements and lease extensions in the coming weeks, CBRE say that the most obvious change likely to be witnessed in the short term is some outward movement in rent-free periods in leases.

About CBRE

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

CBRE U.C., (CBRE Ireland) registered in Ireland, no. 316570. PSRA Licence No. 001528 is the country’s largest commercial real estate services company with offices in Dublin and Cork. Currently employing over 150 employees, we work with occupiers, investors and developers of office, industrial and logistics, retail, hotel and healthcare property, providing strategic advice and execution for property sales and leasing; tenant representation, corporate services; property and project management; appraisal and valuation; development services; investment management and debt advisory; business rates and compulsory purchase and research and consulting. Please visit our website at www.cbre.ie