2014-12-31-莱坊-Dublin_Office_Market_Overview_Q3_2015_7页_4mb

Dublin Office Market Q3 2015 Summary

Economic Context

• Ireland's economy surpassed its 2007 peak activity level.
• ESRI forecasted 6.0% GDP growth for 2015, significantly higher than previous year's projections.
• Employment growth remains strong, with companies like IBM, NIIT, SAS, Parexel, and Accenture expanding significantly, creating high-value jobs and reinforcing Dublin's status as a technology hub.

Office Rental Trends

• Prime office rents continue to appreciate, currently around €55 psf.
• Q3 took-up reached 543,570 sq.ft., the highest for a third quarter in over five years, with 1.73 million sq.ft. let in the first nine months, a 25% increase on the previous year.
• High expensing demand combined with scarcity has driven rental increases despite strong office vacancy rates.

Investment Activity

• Investment activity moderated slightly due to scarce opportunities, a trend expected to continue.
• Twitter's 85,000 sq.ft. lease at Cumberland House (€50 psf) and Workday's 75,000 sq.ft. lease at Kings Building were the largest transactions.
• Aviva's acquisition of One Grants Row highlighted the cautious nature of the office investment market, which was influenced more by supply/demand dynamics in retail than pure risk aversion.
• Knight Frank's analysis ranked Dublin 6th among European office markets, noting it is still significantly cheaper than London and competitive despite high costs due to its attractive business environment.

Development Pipeline

• Development activity showed momentum, with numerous schemes proposed.
• However, access to financing remained challenging, likely delaying many projects.
• The existing office stock is estimated at 38 million sq.ft., requiring replacement at a conservative rate of 1% annually.
• Analysis indicated an insufficient supply of around 1.5 million sq.ft. to meet both existing and projected demand from employment growth between 2016 and 2018, leading to a projected annual deficit of 550,000 sq.ft. during this period.

Capital Markets Outlook

• Capital funders prefer development projects with substantial pre-lets to mitigate risk.
• Demand in the development land market remains high but is tempered by funding constraints.

Conclusion

The Dublin office market is characterized by strong demand from high-value employment, particularly in tech and life sciences. While supply has been insufficient to meet current demand, the relatively high rental levels are deemed sustainable due to the city's position as an economic hub. Estimated new supply falls significantly short of projected need over the 2016-2018 period, reinforcing a structural deficit.