2016 Dublin Office
Market Outlook
Velasco, Dublin 2
Dublin Office Market Overview 2015
Exceptional market performance in 2015 with strong demand, rental growth, and increased construction activity
2.9 million sq ft of take-up which is comparable to peak levels
Take-up and Vacancy
sq ft
3,500,000
25
20
2,500,000
2,000,000
15
1,500,000
10
1,000,000
Vacancy Rate
Take-Up
3,000,000
5
500,000
0
0
2006
2007
2008
2009
2010
2011
Take-Up
2012
2013
2014
2015
Vacancy Rate
Re-emergence of large transactions with 10 deals greater than 50,000 sq ft
3 lettings were for mid lets (buildings that have been let whilst under construction)
Lowest overall vacancy rate recorded at 7.8%, with 3.7% in the city centre
Shortage of prime space across all size categories
2015 was the fifth consecutive year with no new office space completed
Year-end prime rents of €55-€60 per sq ft in the city centre and €25-€30 per sq ft in the suburbs
Office Market Performance
Take-Up
Vacancy Rate
Prime Rent
Stock Under
Construction
Q4 2013
Q4 2014
Q4 2015
1,918,602 sq ft
2,308,531 sq ft
2,866,787 sq ft
18.0%
10.2%
7.8%
€35 per sq ft
€50 per sq ft
€55-€60 per sq ft
0 sq ft
198,907 sq ft
3,099,789 sq ft
DUBLIN OFFICE MARKET OVEREVIEW 2016 | 1
Waterside, Citywest, Dublin 24. Acquired for SAP and Fidelity
1-6 Sir Rogerson’s Quay, Dublin 2
2|
Market Summary
MARKET SIZE – UNCHANGED
SUPPLY – TIGHTENING
DEMAND – STEADY
40.0m sq ft
2.9m sq ft
Total take-up
Comparable
7.8%
total stock
vacant
2.9m sq ft
69%
of deals
less than 10,000 sq ft
to UK regional cities
vacancy rate
All stock
3.7% City Centre
12.0% Suburbs
>50,000 sq ft
Georgian
3.1m sq ft
90% of take-up 3rd Gen
No
32% of stock
Tech and
Business Service
constructed
post-1960
No
buildings
completions
under construction
under construction already
pre-let
10 deals in 2015
sectors driving demand
DUBLIN OFFICE MARKET OVEREVIEW 2016 | 3
Demand 2016
Demand to continue to be ahead of long-term averages, with in excess of 2.5 million sq ft of take-up expected for 2016
Activity will be limited by lack of available stock
60% of take-up was in the city centre in 2015 and this location is expected to continue to dominate demand
Majority of deals for space less than 10,000 sq ft (69% in 2015)
Increasing demand for larger space, with 10 deals in 2015 for space greater than 50,000 sq ft and already 10 requirements
in this category, identified for 2016
Dublin Office Take-up
Take–up (sq.ft.)
sq ft
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2006
2007
2008
Take–up (sq.ft.)
2014
6
2015
10
2009
2010
2011
2012
2013
2014
2015
2016
(f)
10-Year Average
2009
0
2016
15
Deals greater than 50,000 sq ft
4|
This compares to zero deals in
2009 greater than 50,000 sq ft
1 WML, Dublin 2
Increase in mid-lets
Increase in demand from UK companies with reduced reliance on US
Re-emergence of financial and professional services sectors
Increase in bi-locations as occupiers are forced to locate across multiple locations either within one city or across
regional locations
Requirement for non-office space is increasingly important (bike storage, showers and wellness space)
Deals by Sector 2015
TMT 32%
Business & Professional Services 32%
Other 12%
Manufacturing 10%
Education, Health and Social 6%
Service Industries 4%
Transport and Storage 2%
Construction 2%
DUBLIN OFFICE MARKET OVEREVIEW 2016 | 5
Occupiers attracted by Ireland’s 4 T’s
TRACK RECORD
Compelling TRACK RECORD and
long history of established corporates
(Intel, HP, Microsoft, Google)
TALENT
Strong TALENT pool, with
Ireland’s education system
ranking in the top ten in the world
(IMD) and 25% of the population
currently in full time education
TAX RATE
12.5% corporate TAX RATE, one
of the lowest in the world, giving
Ireland a competitive edge
TECHNOLOGY
Significant State investment in R&D helps
ensure Ireland stays at the forefront of
TECHNOLOGICAL INNOVATION
6|
The Exchange,
Dublin11
The Exchange,
IFSC,IFSC,
Dublin
7 Hanover Quay, Dublin 2. Acquired for Accenture
DUBLIN OFFICE MARKET OVEREVIEW 2016 | 7
Supply 2016
There is 3.1 million sq ft of space under construction of which 32% is already let
82% of this space is in the city centre and 18% is in the suburbs
This leaves 2.1 million sq ft of available stock under construction which will be delivered over the next 3 years. But with takeup of 2.5 million sq ft forecast for 2016, this doesn’t even satisfy 1 years’ worth of demand
Stock Under Construction versus Take-Up
sq ft
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2016
2017
Available
2018
Let
Take-Up 2016 (f)
In 2016, only 405,000 sq ft of vacant space will be completed
Until new buildings are available, choice for existing stock will therefore continue to tighten
The current overall vacancy rate of 7.8% is significantly below the European average of 8.9%
Vacancy to remain lowest in the city centre where it is currently at 3.7%
2012
18.2%
8|
2013
18.0%
2014
10.2%
2015
7.8%
2016 (f)
6.2%
Suburbs
+
2.2m sq ft
12.0%
City Centre
=
Dublin Overall
0.7m sq ft
3.7%
2.9m sq ft
7.8%
Availability of space greater than 50,000 sq ft will continue to be limited
There are currently no Grade A buildings that are completed and available greater 80,000 sq ft, with nothing greater than
60,000 sq ft in the city centre
Only 3.7% of vacant stock is available via sub-lease, compared to 10.3% in 2014 and 18.9% in 2011
Only 3 available buildings in the city centre will be completed in 2016, with 17 expected in 2017
There is 0.9m sq ft of stock under refurbishment across the city centre (86%) and suburbs (14%) which will offer additional
supply in 2016
Grade A Availability by Size
12
City Centre
Suburbs
Number of Buildings
10
8
6
4
2
0
0 - 10,000
10,000 – 20,000
20,000 – 30,000
30,000 – 40,000
40,000 – 50,000
50,000 – 60,000
70,000 – 80,000
DUBLIN OFFICE MARKET OVEREVIEW 2016 | 9
Pipeline Supply
NORTH DOCKLANDS
& IFSC
SOUTH DOCKLANDS
TRADITIONAL CORE
CITY CANAL AREA
DUBLIN 4 CITY
Area
Under Construction (sq ft)
All Pipeline (sq ft)*
North Docklands & IFSC
540,000
1,839,148
South Docklands
693,734
1,820,566
City Canal Area
205,755
507,161
Traditional Core
609,925
1,971,420
Dublin 4 City
480,542
1,634,931
2,529,955
7,773,226
TOTAL
* This includes all stock in the planning granted, planning submitted and pre-planning stages.
10 |
Capital Dock, Dublin 2
DUBLIN OFFICE MARKET OVEREVIEW 2016 | 11
Rents and Lease Terms 2016
Prime city centre rents will reach €65 per sq ft and €30 per sq ft in good suburban locations
The last time rents were at these levels was in 2007
Prime Rental Levels
€ per Sq ft.
City Centre
70
Suburbs
60
50
40
20
30
10
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (f)
Rents will be building specific and dependant on location and quality
Long-term leases will continue to be a feature, with typical terms at 25 years with a break at year 15
These long term leases are challenging for international corporates who will look to subleases that can offer flexibility
Incentives will continue to reduce
Rent reviews are now a feature of the market and tenants who took space in 2011 will see an increase in rents in their 2016
rent reviews
Rent Free Periods
Lease Length From
12 |
2015
2014
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
0
2013
5
2012
10
2010
15
2009
20
2008
25
Rent Free To
20
18
16
14
12
10
8
6
4
2
0
2007
30
Months
2006
Lease Length To
2005
Years
Rent Free From
2011
Lease Lengths
No.1 Ballsbridge, Dublin 4
21 Charlemont, Dublin 2
DUBLIN OFFICE MARKET OVEREVIEW 2016 | 13
Top Predictions for 2016
1
2
2016 will be another strong year
for the Dublin office market
Increase in larger deals
4
3
Forced bi-locations and multi-locations
due to limited availability
5
Active enquiries of 2.1 million sq ft
with 10 greater than 50,000 sq ft
6
LEASE
Increase in construction activity with
3.1 million sq.ft. under construction
7
LEASE
LEASE
Long-term leases will remain a feature
of the Dublin office market
8
€65
per sq.ft.
Prime rents will reach €65 per sq ft
14 |
Talent, tax, track record and technology will
continue to attract foreign direct investment
10 Molesworth, Dublin 2
DUBLIN OFFICE MARKET OVEREVIEW 2016 | 15
Ireland’s Top Rankings
1
nd
2
rd
3
th DOING
4 BUSINESS
th
5
GDP
st FOR
GROWTH
in Europe - 2014, 2015 (f) and 2016 (f)
in the world for
Environmental
Sustainability
– (World Economic Forum)
top city in JLL
City Momentum
Index1
which tracks dynamic real estate markets
Best Country in the World for
– (Forbes)
out of 145 countries in terms of
closing the
gender gap
– (World Economic Forum)
1. JLL City Momentum Index (CMI) captures the dynamics of a city’s real estate market – its rates of construction and absorption, price movement and the
attraction of a city’s built environment for cross border capital. The CMI delves into the underlying drivers that keep cities competitive and dynamic, as well as
identifying signals for change that will impact their future.
16 |
JLL City Momentum Index 2016
Bolands Quay, Dublin 4
JLL Dublin
Styne House
Upper Hatch Street
Dublin
D02 DY27
Tel: +353 (0) 1 673 1600
Fax: +353 (0) 1 679 5147
For further information about the Dublin office market, please contact:
Hannah Dwyer
Associate Director &
Head of Research
hannah.dwyer@eu.jll.com
Deirdre Costello
Director, Office Agency
deirdre.costello@eu.jll.com
Fionnuala O’Buachalla
Director, Tenant Rep
fionnuala.obuachalla@eu.jll.com
@JLLIreland
youtube.com/joneslanglasalle
linkedin.com/companies/jll
joneslanglasalleblog.com/EMEAResearch
jll.ie
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