As the post-Covid return of the economy continues, many office-based workplaces are deciding what to do regarding sending workers back to the office. After more than a year of remote work only, it appears more and more likely that most workplaces will be adopting some sort of hybrid model in the near future, with staff splitting time between working from home and in traditional offices.
While this change had been underway, it has been accelerated by the pandemic. However, this does not mean that there is not a lot of demand for traditional office space from employers. Estate agency Savills reports that enough office space to accommodate 30,000 workers will be constructed in Dublin this year. This equates to 196,000 square meters of space over 33 buildings. This represents a surge in demand for office space when compared with 2020, showing a 35 percent increase on the amount of space that came to market in the nation’s capital last year.
This space is being filled at a rate that is surprising when considering the shift to hybrid or remote work that is expected to take place after the pandemic is gone. Savills says that 77 percent of the space coming to the market in Dublin has already been pre let. In addition to the new space being constructed this year, 198,000 square meters of new space will be built in Dublin in 2022, the agency says. 50 percent of this space has already been pre let, according to Savills.
This shift in Ireland represents a shift seen throughout Europe as the pandemic eases its grip and occupiers return to offices. Newly developed offices in Europe are set to provide 26 percent more space than last year, and vacancy rates in Berlin, Stockholm, Amsterdam, and Paris, among others, is set to fall below 6 percent. This comes after a significant decrease in demand and subsequent increase in vacancy rates due to the pandemic, which saw vacancy rates in Ireland increase from 5 percent in 2019 to over 9 percent by the end of 2020.
However, the Central Bank of Ireland has warned that if office construction continues at its current rate, there is a risk of oversupply in the market. The Central Bank noted that the pandemic is likely to affect the outlook in the future, as remote working will remain a feature at many companies. “An increase in the willingness of companies to facilitate their staff to work remotely, accelerated by the Covid-19 shock, will likely affect requirements for office space going forward,” the Central Bank noted. There is a definite risk for oversupply considering these conditions, but much will depend on the agreements made between employers and employees on what is the optimal split between remote work and time spent in the office.