Office take-up of some 126,921 square metres was achieved in the Dublin market in the first nine months of 2011, which is on par with the level of letting activity achieved in the capital in the entire year last year.
With a large number of transactions currently in legals and several buildings reserved, it now appears that office take-up of some 150,000 square metres will be achieved in Dublin in 2011 – an encouraging level of letting activity considering the economic situation.
With occupiers primarily focussed on securing premises in the city centre, rents in the west and south suburbs of the city experienced further falls in recent months although prime rents in other locations in the city have remained stable.
Significant office lettings that have been agreed in Dublin in recent weeks include the letting of 1,700 square metres to SebLife at the Bloodstone building in Dublin Docklands; the letting to Regus of 1,500 square metres at The Crescent building in Santry in the north suburbs and the letting of 483 square metres to the Kuwaiti Embassy at 1 Grand Parade and 483 square metres to Oasis Fund Management in the same building.
There are a number of large requirements outstanding including a requirement from Citigroup for between 6,500 square metres and 9,290 square metres and a requirement from Mastercard for between 2,787 square metres and 3,716 square metres. A US company is also reportedly looking for up to 9,290 square metres of accommodation outside of Dublin.
While CBRE have been eluding to an emerging scarcity of Grade A buildings of a certain size in Dublin 2/4 for some time now, it is now evident that this will be alleviated to some extent by modern buildings being vacated and coming back on the market to let. For example, it has been announced that the head office of EBS in Dublin 4 is to be amalgamated into AIB Bankcentre by the end of 2012, which will free up a modern office building on Burlington Road.
Despite the complete lack of new development in the pipeline, office buildings coming back onto the market will result in the city’s vacancy rate remaining relatively high for the foreseeable future. Most of the transactions being negotiated at present are 10 year lettings with breaks at Year 5 although in an increasing number of lettings to IT tenants, break options are being agreed to coincide with company contracts.
There will be pressure over the next two months to get transactions signed before year-end although this will be somewhat frustrated by the length of time and the layers of sign-off that are currently required to finalise transactions.