Ireland Office Market Surges in 2023 with Strong Momentum!

In the wake of the global pandemic, Ireland's office market is experiencing a remarkable resurgence. Recent research conducted by JLL reveals that the market has witnessed robust leasing activity, with a staggering 408,000 sq. ft. of office space transacted through 54 deals. This represents a notable growth of 49.5% quarter-on-quarter. Moreover, there has been a remarkable 28.6% increase in the number of deals compared to Q1 2023 and a striking 35.3% surge above the twelve-quarter average.

With an impressive 6.1% surpassing of the ten-year H1 average of the number of deals transacted, there is evidence of a dynamic and thriving market. Occupiers and investors alike are seizing the opportunities presented in this post-pandemic era. This resurgence can be attributed to the adaptive occupier behaviors in response to global changes. As such, a new trend has emerged, with the average deal size decreasing by 41.6% in H1 2023 compared to the pre-pandemic ten-year average.

The public administration sector has emerged as the most active sector in Q2 2023, capturing an impressive 21% of the market share. This figure is significantly higher than the sector's five-year average market share of 9%. Simultaneously, despite facing turbulence towards the end of 2022, the tech sector remains the most active, accounting for a substantial 25% of leasing volumes for H1 2023. However, it is worth noting that its volume share has declined from the five-year annual average of 45%.

A noteworthy development in the market is the significant presence of sublease and assignment space, which constituted 23% of the take-up in Q2 2023. This surpasses the five-year volumes, averaging 17.5% of the market. Additionally, greyspace has emerged as a prominent feature within the Dublin market in 2023, accounting for a notable 28.6% of the vacant space. Q1 2023 saw the volume of grey space reaching a record level of 1.97 million sq. ft., slightly reducing to 1.92 million sq. ft. in Q2 2023. The sub-locations of Dublin 2 and Dublin 4 house the majority of greyspace, with 628,000 sq. ft. and 549,000 sq. ft. respectively. Remarkable buildings with available greyspace include Fibonacci Square in Ballsbridge, One Park Place on Hatch Street, and remaining spaces at Cadenza on Earlsfort Terrace.

Despite economic conditions creating an occupier favorable market, with a vacancy rate at 14.1%, headline rents remain elevated at a record level of €65 per sq. ft. This is reflective of a market bifurcation, where buildings that achieve the highest ESG credentials are in high demand, while the increasingly obsolete stock in the Dublin market poses greater challenges for leasing. Furthermore, the construction pipeline for new buildings is dwindling, with no buildings due for completion after 2025 that are not already pre-let.

The Ireland office market is making a striking comeback in 2023, driven by adaptive occupier behaviors and a surge in leasing activity. The market has witnessed remarkable growth, outperforming the ten-year average and showcasing a diverse range of sectors, with public administration and the tech sector taking the lead. However, challenges remain with an increasing presence of greyspace and a scarcity of new developments. As investors and occupiers navigate this evolving landscape, they are urged to leverage the opportunities presented by a market that is poised for growth.