136 new office buildings – totalling over 1.1 million m²– are being planned for Dublin over the next five years, according to a new report by property consultants, Savills Ireland. This would be enough space to accommodate over 100,000 office employees.
Savills ‘Skyline Survey’ notes that 39 new office developments are currently under construction in Dublin – 13 of which have pre-commitment from a tenant to take space. Furthermore, 62 developments have received planning approval but are not yet on site, while 35 are in the planning stages.
The majority of office construction will take place in Dublin’s central business district (CBD) of Dublin 1, 2 and 4. Most of this development will be new builds, with refurbishments and extensions making up over 18% of the pipeline, and the replacement of existing buildings accounting for 39%.
Andrew Cunningham, Director of Offices at Savills Ireland commented: “Between 2010 and 2014, office construction in Dublin came to a complete halt for the first time since records began – something that was almost unique to the Dublin market and not experienced in any other western capital city. Take-up however was strong and as a result, the vacancy rate tightened quickly causing rents to rise sharply. This has made office development viable again.”
He continued: “Although the numbers look quite high, the reality is that the current pipeline is constrained by available equity and debt funding – despite the demand/supply imbalance – and we are observing large scale postponement of schemes, especially those in need of pre-lets to commence on-site. As a result, there is little chance of us reaching a point of oversupply any time soon.”
There is a lack of speculative funding, a recurring issue in the market, with the majority of development in the short-term being undertaken by REITs, funds or private equity backed by pre-funding. NAMA is also playing a significant part, providing full funding for 9% of all schemes and another 5% via joint ventures.
