Savills published their Q2 2010, “Dublin Office Market in Minutes” report on August 3rd. According to the report there is “782,500 sqm of vacant office stock” in Dublin, Q2 2010*. Savills first quarter report details that overall vacancy rate in the city is 21%. Of this, 23% is in Dublin 2 (c.180,000 sqm), 14% is in Dublin 4 (c.109,500 sqm), 21% is in Dublin 1,3,7,8 (c.164,000 sqm), and 19% in the West Suburbs (c.149,000 sqm).
With around 110,000 sqm of new office space due to be completed in 2010, it is difficult to believe that the city will be short of office space for a while, especially given the state of the economy and the number of companies either going out of business or downsizing. It might be the case that landmark/headquarter buildings will come into short supply if they are taken up by large anchor tenants, as argued by Savills, but there is undeniably a substantial amount of available office space all round the city, including large developments, in prime locations, and much of it quality stock completed in the last few years (some that has never been occupied and some secondhand).
They conclude that “It is now clear that the office market has bottomed out and hopefully this will encourage “fence sitters” to progress their requirements before much of the better space is gone.” There is clearly a massive amount of stock available at present in all parts of the city, including brand new and recently completed stock, providing would-be tenants with negotiating room. If the market has bottomed out, it seems likely that growth will be very gradual as the economy starts to stabilize and claw its way back.
Perhaps then it is no bad thing that Savills report that “the supply of new stock to the market will cease in 2011 with no new developments due to be completed in 2011 or 2012” as it will allow for some market correction. Take-up in Q2 2010 was 23,003 sqm through 28 deals (21,000 sqm in Q1 2010), and Savills estimate take up this year will be around 100,000 sqm (based on deals lined up but not signed). (They do not estimate how much space will become vacant in the same period, but clearly some space will become empty as other space fills, especially if a company is simply relocating to take advantage of falling rents). It may take some time then, at the present rate of take-up, to drastically reduce the vacant office supply in the city.
* I’ve updated this post. I originally had an estimate of how many Liberty Halls this would translate into (I’ve now found three different total sqm estimates for the building, that differ quite substantially, so have removed until I can establish the correct size). As an alternative comparison, MacLaran and Kelly report that at the end of 1990 there was 1,055,490 sqm of office space in Dublin (MacLaran, A. and Kelly, S. 2007. Urban property development, in Bartley, B. and Kitchin, R. (eds) Understanding Contemporary Ireland. Pluto Press, London).