Q2 2022 Offices Report

Q2 2022 Offices Report

DOUF FBILCI NE MARKET

2022

OFFICE RESEARCH

Q 2 2022

Q2 2022 KEY TRENDS

MARKET ACTIVITY

firms have led the way, and they have accounted for just over half of all office take-up in Dublin since the start of 2017. Financial services firms accounted for 29% of take-up – their largest share for over 5 years. Waystone took 4,382 sq m at 35 Shelbourne Road in Ballsbridge, while Caceis and Western Union took 1,223 sq m and 1,097 sq m respectively in the Bloodstone Building 2 and Richview Office Park in Clonskeagh. With many organisations still developing their hybrid working strategies, and with increased macro uncertainty, there is strong occupier demand for business space that is available on flexible terms. Consequently serviced office suppliers are enjoying strong occupancy and are back in the market seeking space. Glandore took almost 2,400 sq m at the Bottleworks in Barrow Street, while Pembroke Hall, which took space in Glendenning House on Wicklow St. during Q1, followed-up

Fifty-seven office deals were signed in Dublin between April and June, the busiest quarter for transactions since 2019. These deals encompassed 46,194 sq m of space; marginally ahead of Q1, but up almost 3x year-on-year. The four quarter moving average in Figure 1 shows that leasing is on a broadly positive trajectory, but still remains below pre- Covid levels. The largest transaction in Q2 was the pre-let of 8,179 sq m to TMT company Service Now at 60 Dawson Street. Cloud computing firm Workday, which has been present in Dublin for some years, took just over 5,000 sq m at the newly refurbished Dockline building in Mayor Street. Unsurprisingly, given the lessees in the quarter’s biggest deals, TMT was the largest taker of Dublin office accommodation, accounting for 38% of the quarterly total. This is the 16th time in the last 22 quarters that tech

46,194 sq m TAKEN-UP IN DUBLIN IN Q2 JOHN MCCARTNEY Director & Head Of Research BNP Paribas Real Estate

46,194 SQ M TAKEN-UP nearly 3 times the

Office demand supported by STRONG SERVICE SECTOR JOBS GROWTH

(Covid affected) Q2 2021 figure HOWEVER THE SPACE-PER-EMPLOYEE RATIO HAS FALLEN as macro-uncertainty and hybrid working make

New office completions exceeded net absorption in H1 2022 CAUSING A PICK-UP IN VACANCY

by leasing a further 906 sq m in nearby Dame Lane this quarter. This pattern is set to continue with Iconic, WeWork and Regus seeking additional space for their portfolios.

occupiers more cautious and less clear about their long-term space requirements

FIGURE 1: DUBLIN OFFICE TAKE-UP BY QUARTER

FIGURE 2: SECTORAL SHARE OF TAKE-UP, Q2 2022

Strong occupier demand, and the relative scarcity of ESG compliant buildings, have driven PRIME HEADLINE RENTS TO €673 PER SQ M PER ANNUM (+6.8% Y/Y). However vacancy uptick is keeping average rents in check

DEMAND FOR MODERN, ENVIRONMENTALLY SUSTAINABLE OFFICES means most new buildings are being leased before, or shortly after, completion

160,000

1%

1%

140,000

14%

3%

2%

25%

29%

120,000

38%

11%

100,000

8%

18%

19%

80,000

7%

7%

LOOKING AHEAD, APPROX. 240,000 SQ M OF STOCK WILL BE ADDED IN 2022 against gross take-up of approx. 200,000 sq m for the year

7%

5%

2%

1%

60,000

n Aircraft Leasing n Finance n Health & Pharma n Industry n Other n Professional n Public n Serviced Office n TMT

40,000

20,000

0

4QMA

Take Up

Source: BNPPRE

3

Q 2 2022

FIGURE 4: AVERAGE OFFICE-SPACE-PER-EMPLOYEE INDEX, DUBLIN 1

MARKET DEMAND

Office demand is ultimately a function of the number of desk-based jobs, and the amount of space assigned to each employee. FIGURE 3: DESK-BASED EMPLOYMENT AND OCCUPIED OFFICE SPACE: DUBLIN

105

100

350

5.0

95

4.5

300

90

4.0

85

250

3.5

3.0

80

150

2.5

2.0

100

1 The space-per-employee ratio is computed as the tenanted stock divided by total employment in the Dublin NUTS 3 region, in the following sectors; TMT (NACE group J), Professional Services (M), Admin Services (N), Public Admin (O), Finance, Insurance and Real Estate (K,L). On this basis the average space per employee in Q2 2022 was 12.6 sq m. This quantum should be considered indicative for two reasons. Firstly, the methodological approach assumes all jobs in the named sectors are desk-based, and that no desk-based jobs exist outside of these sectors. This is clearly a simplification. Secondly, the Labour Force Survey, which provides our employment >Page 1 Page 2-3 Page 4-5 Page 6-7 Page 8-9 Page 10-11 Page 12

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