Vacancy rate in Dublin office market likely to peak at 15% this year

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Vacancy rate in Dublin office market likely to peak at 15% this year via IrishTimesBiz

ortion of lettings, widening the gap between take-up and absorption. This is compounded if movers are downsizing, as often happens in a downturn. Reflecting the global headwinds of 2022, most large Dublin office lettings involved movement within the market. Downsizing was not prominent

More than 230,000sq m of new office space was delivered in Dublin last year – the most since 2008. This was somewhat offset by demolitions but, given current churn and subleasing trends, over 450,000sq m of take-up would have been required to digest the additional stock. Ultimately, 248,000sq m was achieved. This was a solid performance, and testament to the broad base of occupier demand that exists beyond tech. But it could not prevent vacancy rising from 10 per cent to 12.4 per cent.

This is a crude and slightly desperate attempt to understate vacancy, and it is fundamentally ill-conceived. Leaving aside random judgments about which buildings to exclude, the notion that vacant older stock does not drag on prime rents is logically dubious. Many of today’s vacant offices are, indeed, Grade C. To let them, rational owners will cut rents. This creates a headache for the owners of Grade B buildings, who have to counter-cut to preserve their competitive advantage.

 

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