Dublin’s office stock contracts as demolitions exceed new completions
Despite enough office space being completed to accommodate 2,700 workers, Dublin’s office stock actually contracted in Q2 due to large-scale demolitions of older buildings.
According to a new report by Savills Ireland over 32,000 sq m of new office space was delivered in Q2, mostly in prime business districts such as Molesworth St., St. Stephens Green and Burlington Road. However an even greater amount of space, almost 40,000 sq m, was de-commissioned during the same period. The net effect was to cause Dublin’s office stock to shrink by around 8,000 sq m.
In most cases plans are already underway to redevelop the withdrawn properties into bigger-and-better office blocks. However one older property – Pinebrook House on Harcourt St. – is being converted to provide much-needed hotel accommodation in the city. According to Savills research the average age of the withdrawn buildings is 30 years old while the average size is 5,641 sq m.
Elsewhere the report notes continued keen demand for office space due to the strong economy and rapid jobs growth. This resulted in lettings of over 100,000 sq m in Q2. With demand exceeding new supply the amount of vacant space on the market reduced by 9,500 sq m and the vacancy rate now stands at 9.2% – although vacancy rates of less than 1% prevail for Grade A buildings in the best business locations.
Commenting on the research Andrew Cunningham, Head of Offices at Savills, says that the appetite to redevelop older buildings reflects the continued demand for Dublin office space.
“Demand for office space across Dublin remains robust. With space in fringe locations such as Dublin 1 and Dublin 7 now being absorbed, the suburbs – such as Dublin 18 – are enjoying renewed demand from office occupiers, a trend which will continue in the short-term. Unsurprisingly, however, demand is weighted towards the central business districts of Dublin 1, 2 and 4 – and the market is responding to this. 4.2m sq. ft. of office space is currently under development in Dublin, 83% of which is situated in the central business district. Therefore, with Dublin city centre having become so built up over the past two decades, older properties are having to make way to allow for this new development to take place.”
Mr Cunningham also noted that 46% of office developments in the central business districts of Dublin 1, 2 and 4 are pre-let.
