JLL Dublin Office Market Update – Q1 2023
The JLL Dublin Office Market Report examines the data and trends throughout Q1 2023.
- Niall Gargan
The JLL Dublin Office Market Report examines the data and trends throughout Q1 2023 and provides an outlook for the 2023 market.
Q1 2023 marks the moment the office market begins in earnest to navigate a post-pandemic environment. As 2022 closed out, the annual leasing volumes for the Dublin market returned to long-term averages on the back of deals driven by occupiers relocating to new Grade A sustainability-designed buildings to achieve ESG targets.
Like most real estate sectors, economic uncertainty has a delayed impact. Throughout the summer of 2022, central banks in most major economies raised interest rates, ending the era of cheap money. The rates were raised eight times over twelve months in the United States alone, marking the country's fastest successive rate hikes in history. These rate hikes and the reimagined workplace of a post-pandemic office environment impacted take-up volumes in Q1 2023 as occupiers attempt to navigate an era of uncertainty that will continue throughout 2023.
This is reflected in the Q1 2023 figures, where 273,213 sq. ft of space was leased, 58.5% below the five-year quarterly average from 2018 to 2022. Additionally, the volumes of space leased were 64.4% below those in the previous quarter. It was the twelfth lowest opening quarter in the last fifteen years, with the global financial crash years of 2009 and 2010 and the height of the worldwide pandemic of 2021 performing lower. Forty-two deals were signed in Q1 2023. The number of deals was 19% above the quarterly average throughout the pandemic years of 2020 to 2022. Despite the number of transactions outperforming pandemic averages, the average size of a deal has dropped considerably. In Q1 2023, the average deal was 6,505 sq. ft, down 66% on the previous quarter and 55.5% on the five-year quarterly average from 2018 to 2022.
However, there are now early indicators for cautious optimism as central banks are likely to pause further interest rate hikes. The slowdown in the pace and magnitude of increases means that occupiers can plan and look ahead to the other side of the tightening cycle. Furthermore, many occupiers are now complementing hybrid working policies, mandating a return to the office for part of the week, which will improve occupancy levels. With active demand within the region of 3m sq. ft, substantial deals are anticipated to come to fruition by late Q3/Q4 2023 and into 2024. Notably, over six requirements for space are 50k+ sq. ft, with EY, Deloitte, SEI, and Maples, seeking out new space. Financial and legal services will lead the leasing activity as the ‘tech crunch’ continues to be played out.