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Dublin

Dublin office market lettings head for 1million sq ft by end 2010

Significant inward investment and job creation led by international companies including Yahoo, Google, Linkedin, Zynga Games and Salesforce.com


Dublin, Thursday 28 October 2010 – According to Deirdre Costello, Jones Lang LaSalle Ireland’s Director of Office Agency, there are further indications this quarter that the Dublin office market is experiencing an uplift in activity on the leasing front after last year’s inertia. “We are expecting total office take-up for 2010 to exceed 1 million sq ft, which represents an increase of at least 300,000 sq ft on 2009 take-up”, she said.  

“The recovery is mainly being led by inward investment from international companies either setting up businesses here, or expanding their existing operations. For example, Google has taken over 80,000 sq ft of offices in the city this year. New arrival LinkedIn hopes to establish itself with a 30,000 sq ft operation and quickly grow this to 50,000 sq ft.  Zynga Games are also seeking to establish a European base in Dublin and plans to increase its space from 10,000 sq ft to 30,000 sq ft, while long-established multinational Salesforce.com plans to increase its existing space up to 80,000 sq ft over the coming years.

 “The big difference between now and the boom years is that a significant amount of the demand for new space is coming from international companies which are creating high-value software research and development jobs in Dublin. In contrast, during the height of the last boom, office take-up was predominantly led by professional services companies and financial institutions”, she added.

Deirdre Costello was commenting following the publication of Jones Lang LaSalle’s latest Dublin Office Market Review. Among its key findings:
• Total office take up for Q3 2010 increased 25% year on year when compared with Q3 2009

• The majority of Q3 lettings were in the 1,000 to 5,000 sq ft bracket, which is consistent with market activity since the economic downturn

• Suburban office locations such as East Point, Swords and Sandyford continue to be the most popular locations, while in the city centre, the majority of demand for space is in the prime Dublin 2/4 areas and in the North and South Docklands.

• Prime headline rents in the city centre have levelled out to between €30 and €37 per sq ft and suburban/city edge rents to between €16 and €20, which is broadly consistent with trends in the first half of 2010.
 
Trends
• IT companies and pharmaceutical companies continue to be the most active tenants in the market, as a result of expanding their existing business units or setting up new business activities. 

• Currently, only four buildings in the prime city centre are equipped to cater for companies with requirements of 100,000 sq ft and above. It is expected that as larger companies return to the Dublin market, they will be competing for limited stock and this may result in some increase in rental levels on a building-by-building basis.

• The new office supply pipeline has effectively stopped with the exception of four major developments in Dublin city centre which are due for completion by end 2010.  These include Montevetro, 5 Grand Canal Square, The Point Village and Trinity Central.  Combined, these developments account for 507,298 sq ft.

• Increased media coverage highlighting multinational firms’ inward investment plans and their acquisition of new premises has filtered down through the market, resulting in increased tenant confidence. This is evident in the 32 transactions in the 1,000 to 5,000 sq ft range which took place during Q3 1010.

Deirdre Costello notes that letting incentives such as extended rent-free periods, flexible leases and early break options are all still prevalent in the office transactions that took place during 2010, and are set to remain a feature of the market for the foreseeable future.  “This combined with increased levels of staff availability makes Dublin more attractive for international corporates considering locating here. Given the competitiveness in the office market, now is also a good time for Irish companies to lease new premises or renegotiate extensions to an existing lease”, she noted.