Dublin Office Market Q3 2020 Summary:
Expansions from tech and pharma companies support take-up in Q3, while demand for investments from European buyers remains strong
- The Irish economy is now forecast to perform much better in 2020 than was expected during the early days of the pandemic
- 230,000 sq ft of office space was let in Q3. This brings take-up for the first nine months of 2020 to 1.1 million sq ft
- The vacancy rate rose to 8.9% in Q3. While prime rents declined by 8% to €57.50 psf
- 728,000 sq ft of new office stock reached practical completion in Q3
- €213.7 million worth of office investments changed hands in Q3, bringing volumes for the first nine months of 2020 to €835.1 million
According to the latest forecast by the EU Commission, the contraction in the Irish economy in 2020 is likely to be smaller than previously anticipated. GDP is now projected to decline by 2.3% compared to the 7.9% forecast in the earlier stages of the pandemic in Spring. This 5.6% improvement represents a significant relative out-performance compared to the outlook for other developed economies.
Multinational exports are the main reason why the contraction will not be as large as once thought. Data from the CSO shows that Ireland is witnessing robust growth in the export of medicinal and pharmaceutical goods. The values of which was 24% higher during the period from January to August 2020 compared to the same period last year. Driving this is the fact that Ireland is one of the top five global exporters of Covid-19 related goods according to the OECD. Although more timely data is not available on service exports, evidence from the Quarterly National Accounts shows that there has also been a strong increase in the value of computer services – up 4% in Q2 2020 compared to the same period last year.
This is another sector in which Ireland has a substantial footprint of global multinational companies. The fact that these companies continue to perform well during the pandemic will also benefit Dublin’s office market. As this will ensure that the employment base is still there to repopulate offices once the economy reopens.