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News Release

Dublin

Snap Shot of the 2010 Dublin Office Market

Total take up for 2010 increased by 69% on 2009 levels


After a particularly depressing year in 2009, 2010 brought significant increase in activity, in fact 69% up on 2009 levels.  Total take up for 2010 reached 123,298 m² and whilst this is significantly higher then 2009, it is 15 years since we have seen levels like this, the last occasion being in 1996.  Fionnuala O’Buachalla, Director of Tenant Rep at Jones Lang LaSalle said “the difference between 2009 and 2010 is that many occupiers spent 2009 trying to identify opportunities to reduce their costs and developing strategies whereas 2010 was the year that they implemented them”.  The significant level of supply (vacancy rate 23%) meant Tenants had plenty to choose from and as a result were able to achieve very flexible lease terms (typically 10 years with a 5 year break option), generous rent free periods (typically 9-15 months) and bottom of the market rents.  In particular, the introduction of the ban on upwards only rent reviews as and from 28th February 2010 also had a positive impact as can be seen by the levels in take up in new leases – 80% of transactions were new leases.

Unfortunately the vacancy rate has continued to stay at a significant level of 23%, the highest ever seen in the market.  Deirdre Costello, Director of Office Agency at Jones Lang LaSalle said “We are moving into a market with a two tier vacancy rate.  The 23% rate includes stock aged 30 years and older which in many cases is actually un-lettable as Landlords have not spent any money upgrading or refurbishing these buildings to make them lettable which is not surprising given the amount of modern, new stock available.  If you take out this older product, this automatically brings the vacancy rate down to 20%”.

Dublin 2 remained the winner again in 2010 with the lowest vacancy rate in the market, 17% and the highest level of activity at 35% of take up.  There were only two lettings in 2010 which were over 5,000 m² and these were also both in Dublin 2 and were to the Central Bank (5,276 m²) and Bord Gais (5,213 m²).

East Point proved the most popular location outside of the city with significant lettings to Yahoo, Citrix and Google with total take up in 2010 of 14,109 m² representing 11% of take up.

We believe prime rents have reached the bottom and the question now remains, how long will they stay there?  It is unlikely that the market will show a sign of rental growth during 2011, but as supply of prime product tightens, there should be a return to growth in the next 24 months.  It is likely that the vacancy rate will decrease in 2011, but without a significant increase in take up it is unlikely that the rate will go below 20%.  There is already 20,000 m² reserved for Quarter 1 2011 which is a strong start.