Prime Dublin office vacancies stand at less than 2%

Less than 2% of the capital’s stock of Grade A office accommodation is idle, as the particularly strong take-up seen over the past 18 months continues unabated.

The Grade A vacancy rate has dropped to just 1.56%, while the overall rate continued to decline, falling from 11.27% to 10.15% half way through the year.

The reduction came on the back of office take-up of almost 83,500 sq m in Dublin over the second quarter of the year — more than twice the first quarter volume.

“This is an impressive result considering that the long-run average take-up in Dublin is in the order of 167,000 sq m per annum,” said Marie Hunt, executive director of commercial real estate company CBRE.

“Take-up was boosted in the quarter by the signing of three large lettings in excess of 4,645 sq m during the period, including two pre-lettings.”

Those deals include the pre-letting (pre-construction lease agreement) of 12,031 sq m to Bank of Ireland at the former Fás building on Baggot Street and the pre-letting of 7,653 sq m to aircraft leasing company Aercap on St Stephen’s Green.

There were 62 individual lettings signed in the second quarter of the year, in addition to 64 in the opening three months of 2015.

Of the 62 Q2 office lettings, 30 were to Irish companies, with a further 15 to US firms.

Almost three quarters of the take-up in the capital during the same period occurred in the city centre.

Of the 21,420 m sq of office transactions signed in the suburbs, 64% of the activity occurred in the south suburbs with just shy of 30% in the west suburbs.

Prime office rents have now risen to €538 per sq m, with prime yields steady at 4.75%, according to research carried out by CBRE.

With vacancy rates continuing to decline, demand for accommodation yet to hit the market is also proving particularly strong with 50% of the 165,000 sq m under construction already pre-let.

Computer and tech firms accounted for 27% of office transactions signed in Dublin in Q2 with financial services companies making up the same proportion.

Seven of the 10 largest lettings agreed in Q2 were expansions, two were relocations, and one was a letting to a new market entrant.