Dublin Office Market Overview Q3 2018

Dublin Office Market Q3 2018 Summary:

Year-to-date office letting activity is 8% higher than at the same juncture in 2017.

Summary

  1. The ESRI upgraded their economic forecast for 2018 to 8.9% from 4.7%.
  2. 562,000 sq ft transacted in Q3, bringing take-up to 2.2 million sq ft for the first nine months of the year.
  3. Prime Grade-A rents stand at €62.50 psf in Q3, unchanged for the past 12 months.
  4. Office yields remain at 4.0%, unchanged since the end of last year.
  5. Dublin 8 is seeing heightened investor activity.

Overview

Economy
The Irish economy continues to expand at a rapid pace. Stronger than expected domestic consumption combined with trade effects has prompted the Economic Social and Research Institute (ESRI) to revise up its 2018 GDP forecast to 8.9% in its Autumn Quarterly Economic Commentary. This is up from the 4.7% contained within its Summer forecast.

While GDP figures for Ireland need to be treated with a degree of caution due to the well documented distortions caused by the multinational sector, the alternative
measure introduced in 2017 by the Central Statistics Office (CSO) designed to strip out these effects – Modified Gross National Income or GNI* – has illustrated broadly similar growth for the Irish economy over the last couple of years (12.3% for GNI* V 12.1% for GDP between 2016 and 2017).

The new measure was developed in response to the 2015 GDP growth figure which showed an expansion of 34.4% compared to 8.6% for GNI. The former figure being grossly inflated by a number of one-off re-domiciliations of intellectual property to Ireland in the aircraft leasing sector. Overall, between 2013 and 2017, the economy grew by 43.3% as measured by GNI and 67.9% as measured by GDP. The variance between the two is largely explained by the aforementioned activity in 2015.

Special Focus: Dublin 8 Area

It is hard to argue with the assessment that Dublin 8 has underperformed as an office location. Despite its central location adjoining Dublin 2, it has remained a fringe office location accounting for just 2.7% of total take-up between 2013 and 2017. However, there are signs that the area’s fortunes are changing. In this Area Focus, we examine the dynamics at play in this sub-market and evaluate its prospects for future growth as an office location.

While having a rich historical heritage dating back a thousand years to the very foundation of Dublin near Christchurch, Dublin 8’s evolution in the 20th Century saw it become characterised as an area of low density working class housing and heavy industry.
Times are changing however. As illustrated in the map, there are a number of ongoing regeneration projects across a range of uses that are helping to revitalise Dublin 8. In particular, regeneration is being driven by the forces of housing and tourism:

Click to read the Dublin Office Market Q3 2018 Report in full.

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