Overview

Demand was healthy in Q3, with robust take-up levels of 76,200 sqm recorded.

The city centre was the most active region again, accounting for almost three quarters of all transactions.

Occupiers from the Professional Services sector led take-up in Q3, accounting for one third of take-up.

Over the first nine months of 2016, domestic occupiers dominated; accounting for 50% of accommodation transacted.

The volume of available office accommodation dropped by 10% to 353,400 sqm in Q3. On an annual basis, supply levels dropped by 24%.

Notably, the vacancy rate in the overall Dublin market fell below 10% for the first time since 2000.

Market Terms

The market remained in favour of the landlord and they continued to seek 20 to 25 year leases with 10 – 12 years commitment. Rent

free periods in the city centre were generally below six months and under a year in the suburbs.

The index of overall Dublin office rents continued to grow in Q3, but at a much slower pace; increasing by 0.4%. This compares with the same period in 2015, when it was 10.8% higher. Notably, the index has increased by 102.8% in the three years from March 2013.

Rents in the city centre grew marginally by 0.3%. Interestingly, of the individual regions, the north suburbs saw the largest quarterly increase in Q3 (3.1%). This index is now 1.5% above its peak level.

Activity

Activity levels in Q3 almost doubled when compared to the previous quarter with 76,200 sqm of space transacting. This compares to 43,600 sqm of accommodation taken up in Q2.

The city centre was the most active region again, accounting for almost three quarters of all transactions (by size).

The most notable deal was Grant Thornton’s

Dublin Office Update

Take-Up Activity levels in Q3 almost doubled on previous quarter

Vacancy Ratein the overall Dublin market fell below 10% for the first time since 2000

New Construction 281,500 sqm of accommodation under construction

Rents

Yields

Supply

Demand

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3rd Quarter 2016

3

Central Bank of Ireland, Dame Street, Dublin 2.

We Know Property

pre-let of 9,950 sqm under construction at 13-18 City Quay. Grant Thornton has reportedly agreed a rent of €565 psm with a 25-year lease with a mid-term break option.

Other large lettings in the city centre include Shire (7,050 sqm) acquiring Blocks B&C in the Miesian Plaza, Lower Baggot Street. Google took a sizeable 4,550 sqm in Eastpoint, while Intercom agreed to rent 4,100 sqm in Stephens Court.

In the suburbs, the north region was the most active with 14% of transactions occurring there. Oracle acquired 2,700 sqm in East Point. The south suburbs accounted for 12% of the total, with Ardagh Glass taking 2,450 sqm in Pelham House.

Occupiers from the Professional Services sector led take-up in Q3, accounting for one third of the total. This was followed by the IT sector with 26% of total space taken. The top four deals occurred in these areas.

In the year to date, the IT sector accounts for the largest proportion of take-up, 27%. The Professional Service sector accounts for 21%, while the Financial Sector accounts for 15% of total take-up.

Domestic occupiers dominated in the first nine months of 2016, accounting for 50% of accommodation transacted. Of the 50% of occupiers from overseas, 36% were from the US.

Supply

The volume of available office accommodation dropped by 10%, to 353,400 sqm in Q3. On an annual basis, supply levels dropped by a significant 24%.

In terms of the classification of supply, 19% comprised new accommodation, while 21% was sub-standard space and 16% was refurbishments. The remaining space was second-hand. The availability of space varies considerably by location with Dublin 2 and 4 combined having just 0.2% of new available space, 33.4% sub-standard and 24.6% used. 41.8%

of the total space is currently under refurbishment.

At the end of September, the overall Dublin vacancy rate was 9.9%. This is the first time the overall rate has fallen below 10% since 2000. In Dublin 1, 2 and 4 combined, the vacancy level was 6.8%. However, stripping out sub-standard space, the true vacancy rate was 4.7%.

Under Construction

Over the first nine months of the year, 14,800 sqm of space was constructed. Approximately 281,500 sqm of office accommodation is currently under

lisney.com

TAKE-UP: BY OCCUPIER ORIGIN Q3 2016 TAKE-UP: BY REGION Q3 2016

Source: Lisney

TAKE-UP: BY SECTOR Q3 2016

40%

40%

14%

4% 1%

1%

Ireland

United States

United Kingdom

Europe

Rest of the World Unknown

33%

26%

11%

11%

10%

5% 4%

Professional Services

IT Financial

Other Pharma State Education

71%

14%

12% 3%

City Centre North Suburbs South Suburbs West Suburbs

Source: Lisney

VACANCY RATE Q3 2016

0%

5%

10%

15%

20%

25%

City Centre North Suburbs South Suburbs West Suburbs

Vacancy Rate

All Dublin: 9.9%

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Deborah MahonChartered SurveyorE: dmahon@lisney.com

PSRA

No:

001

848

Aoife BrennanDirector | Head of ResearchE: abrennan@lisney.com

Tanya DuffyProperty ResearcherE: tduffy@lisney.com

Lisney Research Lisney Offices

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construction in the Dublin region; all of which is due to be completed before the end of 2020. However, about 100,100 sqm (one third) of this is pre-let, mid-let or being developed by owner-occupiers with a further 33,750 sqm reserved and due to be let in the coming months.

This remaining space (147,650 sqm) will be added to supply, if not pre-let. As projects near completion, the prospect of further pre-lets increases.

A further 270,000 sqm of accommodation is due to be completed by the end of 2020. 70,000 sqm of this will commence in 2016 but the remainder is going through the planning system. Assuming there are no significant delays, all should be completed by December 2020.

Additionally, there is approximately 320,400 sqm of office space in the pipeline at pre-planning stage. However, it is difficult to predict a time-scale for the delivery of these projects as external shocks can change the development landscape significantly and quickly.

Outlook

• 2016take-upislikelytobearound200,000 sqm.

• Supplywillfallintheshorttermbutpotential tenants will increasingly look to new schemes as they advance construction.

• Furthernewschemeswillcommencein the coming months.

• TheoverallDublinvacancyratewillcontinue to fall further.

RIVER LIFFEY

GRAND CANAL DOCK

ROYA

L CA

NA

L

RIVER

DO

DD

ER

GRAND CANAL

GRAND CANAL

POINT VILLAGE

SPENCER DOCK

MAYOR STREET

BUSARAS

JERVIS

ABBEY STREET

CONNOLLY

ST STEPHENS GREEN

HARCOURT

CHARLEMONT

RANELAGH

BEECHWOOD

COWPER

LUAS

LUAS

DART

CONNOLLY STATION

PEARSE STREET

TARA STREET

CLONTARF

GRAND CANAL DOCK

IFSC

BALLSBRIDGE

SANDYMOUNT

RINGSEND

IRISHTOWN

RANELAGH

DONNYBROOK

RATHMINES

OFFICE NEW BUILD SUMMARY Q3 2016

Under Construction Completion by 2020 Pre-Planning Stage

Source: Lisney