Dublin’s office market is set for a record-breaking year if take-up continues at current levels, according to Murphy Mulhall’s latest Market Monitor report. There has be 1.8m sq ft of take up during the year to date (H1 2018) and, with current levels of market activity, a similar figure could be achieved in the second half of the year.
James Mulhall, managing director at Murphy Mulhall, said: “I wouldn’t bet against it being a record year for take-up. We have seen significant pre-letting activity from the start of 2018 and there is more on the horizon. If all the prospective pre-lettings happen, it will be another bumper year.”
Once again the tech/creative/digital sector dominates letting activity, accounting for 46% of all take-up in the city. In addition, the co-working phenomenon has truly arrived in Dublin, with flexible workspace providers accounting for 15% of all take-up during H1 2018 and WeWork contributing two of this year’s five biggest deals.
This strength of demand is putting upward pressure on rents as occupiers are having to accept that the best space comes at a premium.
“The reality is that rents are going up wherever you are in the city. There’s no way to swim against the tide on this, so we would advise occupiers to look at overall occupancy costs and take a long-term cyclical view rather than getting hung up on headline rents”, adds Mulhall.
Meanwhile, Dublin’s investment market is also enjoying a busy year with 2018 investment spend likely to surpass 2017 levels with a strong first half of the year. Current projections suggest that year-end transactional volumes will exceed €3 billion.
The bulk of market activity centres on the sub-€5m bracket, which is cash-driven due to a continued lack of lending appetite.
Robert Murphy, head of investment at Murphy Mulhall, said: “Despite a positive start to the year and some encouraging levels of activity, the market continues to suffer from a dearth of credit as the traditional banks opt for less risky, larger-scale sectors of the market, preferring to lend to larger borrowers with less risk”.