“The recovery in the market has seen rents grow from €28/sq ft in 2011 to €60/sq ft now, just €5 below the peak of 2007,” says John Ring, head of research at Knight Frank’s Dublin office.
No new office stock was delivered to the market between 2012 and 2015 and with the grade-A city centre vacancy rate under 5% and demand remaining strong, the construction of new offices is picking up pace - as Ring points out, 7.3m sq ft of new space is due to come on stream between 2017 and 2019, of which approximately 30% is already let.
"With six of the top ten letting transactions in the first half of the year involving newly delivered office stock, the high level of take-up can be attributed to the flow of new office stock that is coming on stream which is unlocking pent-up demand and translating into deals in the market," says Ring.
The largest deals of the first half of the year were Facebook’s taking of 170,000 sq ft at The Beckett Building; Allied Irish Bank’s letting of 152,000 sq ft at Block H Central Park; JP Morgan’s purchase of the 128,220 sq ft 200 Capital Dock; Zendesk’s letting of 57,865 sq ft at 55 Charlemont; and Google’s letting of 51,096 sq ft at the Velasco Building.
Ring says: "The number of high-profile tech companies contained within the top deals highlights the importance of the TMT sector to Dublin, which accounted for 45% of the market in the first half of the year, followed by finance which accounted for 25%."
Letting activity remains focused on the city centre, accounting for 57% of deals, with a further 21% at the city fringe. Of the remaining 22% of deals, approximately two thirds were located in the suburbs in the south of the city.
"Looking ahead to the rest of the year, Dublin is expected to benefit from a number of post Brexit bank relocations with Bank of America, Citigroup and Morgan Stanley having already made announcements in this regard," says Ring, who notes Barclay's relocation of 150 staff to Green REIT's soon-to-complete One Molesworth Street.
"With a strong deal pipeline in place for the rest of 2017, we are likely to see full-year take-up exceed the 2.85m sq ft achieved last year," he adds.