Take-up in Dublin's office market reached 45,500 m² in Q1 2011, up 2% on the previous quarter and twice the 21,000-m² level seen in Q1 2010, according to Savills research. The international real estate advisor predicts that take-up could total 150,000 m² by the end of the year, reflecting a healthy demand for prime office stock in the Irish capital.
According to the firm a 0.4% drop in the overall vacancy rate in Q1 2011 compared with the previous quarter, to 23.2%, is due to a shortage of new office space and continued increase in take-up.
Joan Henry, Head of Research Savills Ireland, says: "Demand for office space in the first three months of the year has been strong. The fall in vacancy rate reflects a combination of factors, in particular a consistent level of demand for space since the middle of 2010 and a halt in the amount of newly completed space coming to the market, especially grade-A space in prime locations."
The research shows that four major deals made up almost 70% of total space taken up in Q1 2011, with Google's purchase of the new 19,000-m² Montevetro office building accounting for 42% of total space. Apart from this investment Savills reports that the remaining Q1 transactions were all lettings, with 36 deals completed compared with 67 completed deals in the previous quarter. However the average square meterage of completed deals in Q1 2011 was almost double that of deals completed in Q4 2010.
Roland O'Connell, Director of Office Agency Savills Ireland, says: "We expect demand for space to remain consistent as existing occupiers look for opportunities to move to better locations on more favorable terms and conditions. The continued interest and demand from multi-nationals, particularly in the IT and financial sectors, recognizes Dublin's competitiveness as an important business center. All these factors bode well for a continued recovery in the city's office market in 2011 and our expectation is that take up could reach 150,000 m² by the end of the year."
Savills expects prime Dublin rents to remain stable at around 350-375/m²/per year.