Take-up of office space in Dublin has slumped 63% in the 12 months to end of September, the latest figures from BNP Paribas Real Estate says, with tech firms taking up its lowest share of office demand since quarterly records began.
The report noted that office vacancy rates have now risen to 12.5% and are now expected to peak at around 16% next year. However, it also said that the level of oversupply remains relatively limited in the capital as new construction continues to tighten.
The quarterly market report from the commercial property agent shows that less than 29,000 sq m of office space was taken up in the third quarter of the year, and that the average office size plunged from 1,510 to 655 sq m.
A global slowdown had been affecting the industry over the past year, where demand has shifted away from tech firms which traditionally had bigger office requirements.
Tech accounted for just 8.4% of take-up between July and September – its lowest share since quarterly records began,” said John McCartney, director of research at BNP Paribas Real Estate.
As seen in previous quarters in recent times, businesses are “taking advantage of remote working to reduce their office space”, the report said.
However, Mr McCartney said that while there was clearly an oversupply of offices at the moment it was likely to be a “shallow downswing”,
“Over the last 18 months we have been cautioning that an oversupply situation was coming, and this has proved to be correct,” he said. “However, the construction pipeline has never gotten too far ahead of demand, so peak vacancy is likely to be quite manageable by historical standards.”
Last month, social media giant Meta paid £149 million (€171 million) to break its lease on a major London development near Regent’s Park.
Meta is moving ahead with plans to open its new European headquarters in Ballsbridge, but it decided last December to forgo occupying nearly 35,000 sq ft of the Dublin 4 site.
Previously, Quarter 2 figures released in July 2023 showed that tech companies are now taking-up significantly less newly available office space in Dublin than in previous periods – and that office leasing remained subdued in 2023.
BNP noted at that time that technology jobs are amenable to remote working, and research confirms that remote and hybrid strategies are most extensively used in the ICT industry.
In contrast to the residential market, it is believed that even in prime city centre locations, the market has moved in favour of tenants with lease terms reducing sharply and with landlords being forced to offer bigger rent frees relative to the reduced terms.