Dublin and Cork office market seeing growing vacancy rates 

In Dublin, an estimated 120,000 sqm of office space was taken-up during 2023, less than half the previous 10-year annual average of 243,000 sqm.

The office markets in Dublin and Cork are seeing growing vacancy rates and “significantly lower levels” of take up than the longer-term average as work-from-home practices and adjustments in the tech sector continue to make an impact.

In its latest outlook report, the estate agency Linsey Sotheby’s said that trends seen over the last 12 months in the sector are likely to continue into 2024.

In both Dublin and Cork there has been growing levels of vacancy due to “grey space” - an area in the office that is surplus to the tenants requirements.

There has been a rapid rise in grey space in Dublin over the last few years, growing from effectively zero in 2019 to about 205,000 sqm. The Cork market has been relatively immune to this trend with only about 5,700 sqm of grey accommodation available but this is growing.

In Dublin, an estimated 120,000 sqm of office space was taken-up during 2023, less than half the previous 10-year annual average of 243,000 sqm.

The report said Dublin has seen “significantly lower levels of take-up than the long-term average”.

However, on the positive side for the sector, there are 60,000 sqm of active requirements in the market at the end of 2023, which the report said bodes well for the first half of this year.

“While some improvement in activity is likely this year, reverting to the pre-pandemic norm is unlikely in 2024,” the report said.

In Cork, grey space is beginning to emerge as a feature of the office market with this expected to intensify in 2024 “albeit not to the same levels as other markets”.

“This will push the vacancy rate higher in Cork, following a period of minor decline in the latter half of 2023.” 

Office activity levels in Cork will remain muted in 2024 businesses continue to assess requirements and the wider global economic conditions.

“There is over 140,000 sqm of office space with planning permission but has not yet commenced across Cork. Unless pre-lets are secured, it is very unlikely any of this will progress speculatively in the short-term.” 

In terms of residential housing, the report said supply is unlikely to improve in the coming months but prices are expected to remain “generally stable” with potential purchasers remaining cautious.

Lisney Sotheby’s said the greatest impediment to the residential market sector remains the chronic lack of supply and delays in completing transactions.

In Dublin, the company does not expect a dramatic fall off in demand even though it became “somewhat flat” during the second half of 2023. This trend is expected to continue into this year.

Trends in Dublin are also being seen in Cork with supply constraints and delays concluding deals remaining the key impediment in the market this year. However unlike Dublin, in Cork, the high interest rates are impacting the upper-end of the market as well as the lower and mid-market.

The report said that the lack of homes means that transactions will occur and that prices “will be generally stable” as potential purchasers will remain “cautious in the opening months of 2024 as elevated interest rates continue to impact affordability and repayment capacity for a large part of the market”.

The company said it does not expect to see a bump in sales around March and April, as is usually the case, as the autumn months last year - another traditional selling season - did not see a bounce.

It also suggests many vendors selling property fear the timing of the sale and believe “now is not a good time” given the high interest rate environment.