In the past year, we’ve seen the Dublin office market prices in rent fall to the lowest they’ve been since 2016. The COVID pandemic has caused the economy to slow to a standstill, and with that, the majority of such companies are postponing their long term executive decisions due to the uncertainty the pandemic has brought about. Office rents have fallen from the high of €65 per square foot down to €59 near the end of 2020.
Even so, there have been signs of economic recovery near the end of the last quarter of 2020. This is expected to grow and continue as the vaccinations for the virus begin to become publicly accessible to the general public. The vacancy rate in the Dublin offices ended at around 9.5% due to reduced demand and office hours during the pandemic. This grey space comes into the market and accounts for nearly 25% of the available office space in the capital. These spaces are continuing to compete with traditional landlords as they offer more flexible terms of lend to their customers. There have been estimations that over the next two years, nearly 5.1 million square feet of new office openings will develop. Over half of this space has been pre-lent.
The largest office letting happened when Mastercard signed for 245,000 square feet of space at One and Two South County prior to the COVID pandemic’s arrival in Ireland. This includes how other large companies such as Microsoft has decided to rent 47,000 square feet of space in Dublin Landings. Other prospective companies include TikTok, this Chinese based social media company that has seen substantial growth within the last year and is looking for space of over 500,000 square feet to base its next space.
Many of these space lenders expect the release of the COVID vaccine to improve economic sentiment in potential occupiers to increase demand within the market. Overall, the effect of the pandemic may have called a lull in the demand of the market during 2020, but it has also caused the change of more flexible working hours to become normal in society, as well as blending work practices. These will all drive up the demand, especially within the technology sector, of these offices that can be lent out to these cooperations.
Lucas Zhang was a Finance major at Ohio State University. He writes about finance, mortgages, and technology for Irish Mortgage Brokers.