According to Savills latest office report, lettings activity showed an increase of 25% in 2011, compared to 2010, causing vacancy to reduce from 23% to 21.6%. The international real estate advisor predicts demand will remain strong for prime space in 2012 but overall vacancy rates may remain the same or marginally higher as some occupiers exit buildings. The overall take-up level for 2012 is forecast at circa 130,000 m²(1,399,354 ft²).
Savills reports that demand continues to be led by a preference from occupiers for space in prime locations namely Dublin 2 and 4, which accounted for 24% and 32% of 2011 take up respectively. The international telecoms, media and technology companies are anticipated to expand keeping market terms and conditions tight as zero development pipeline is forecast for 2012, against only 12,000 m² (129,171 ft²) development completed across the market in 2011.
Joan Henry, director of Research for Savills Ireland, comments: "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."
The research indicates that out of town letting activity was strong in the final quarter of 2011, with the south suburbs making up 25% of the total space let in the quarter. The largest deal in the south suburbs was the letting of 3,200 m² to Mastercard, and this is illustrative of the financial services and ICT sectors driving demand in these areas.
Roland O'Connell, director of Savills Ireland, adds: "In terms of rental prices, prime rent of Q411 showed prices at between 300-310/m²/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."