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The take-up of office space in Dublin slumped to a three-year low between January and March this year, in what was dubbed an “exceptionally slow” start to the new year.
New research from BNP Paribas Real Estate Ireland reveals that just over 16,000 square metres of purpose-built office space was taken up in the first quarter of 2024 – the lowest quarterly take-up since the height of the Covid pandemic in 2021.
The report finds that Dublin’s office market is oversupplied and that that oversupply is set to grow over the next 18 months. The first quarter of 2024 saw the completion of 84,286 sqm, which is greater than the amount of office space added to the market in the entirety of 2023.
Over 300,000 sqm of further space is expected to be delivered by the end of 2025.
Research Director at BNPPRE, John McCartney said that the vacancy rates have created a tenants’ market, with those rising rates giving tenants a greater choice and leverage in rent negotiations with their landlords.
Speaking on Morning Ireland, Mr McCartney noted that a geographical shift in activity had taken place, with office space outside of the city centre now proving attractive to businesses.
“The suburban share of take-up has risen quite strongly and that may well be because companies are reconfiguring their footprint to try to locate themselves close to where people live,” he said, adding that “particularly because we are nearly at full employment, I think they are trying to locate close to where housing is less expensive and that has been particularly the west and north suburbs,” he added.
Remarking that Dublin “continues to underperform European markets,” the report notes that three “key dynamics” dragging down office uptake are the global economic slowdown, tech sector inactivity and remote working.
Despite this, BNPPRE’s Keith O’Neill said that office leasing is “naturally cyclical” and that reserved space spiked in the first three months of the year (up 25%), indicating an improvement in the future.
The report also states that some unused office space is being repurposed, largely to hotels, and education and medical facilities rather than for residential use.
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