The jury is, more or less, out on whether 2023 will bring with it a substantial decline in the Dublin office market after two years of flux and uncertainty. If you listen to the experts, there is strong evidence that the resilience observed in 2022 will continue into next year with demand for newer, more energy efficient city centre properties, in particular, buoying the market overall.
In its final office market report of the year, Savills Ireland said this week that it expects office take-up in the capital to reach 2.25 million sq ft for the full year, nearly 50 per cent ahead of 2021 volumes but still more than 30 per cent lower than 2019, when deals for a total of more than 3.36 million sq ft were agreed. City centre stock remained “the focus of the year”, the property agent said, with “flight to quality” trend pushing occupiers towards newer locations in the city’s core as energy efficiency climbs to the top the agenda. This may lead to a softening of the market in the periphery where older stock predominates (although, interestingly, suburban locations saw an uptick in take-up in the fourth quarter of the year).
All of this combined with the strong employment growth forecast by the Central Bank and others for 2023 – in spite of worsening macroeconomic conditions – indicates that there remains a pretty strong floor under the Dublin market as the new year dawns.
[ Tech giants ditch office space in Dublin and LondonOpens in new window ]
However, with tech companies accounting for the lion’s share (36 per cent) of the total amount of new office space occupied in Dublin this year, the overall headwinds the sector is facing into cannot be discounted. This week, the Financial Times reported that, having scaled back their plans for Ireland, tech behemoths such as Meta are also abandoning deals in London.
Having signed for 310,000sq ft of space in Fitzrovia last year, the Facebook owner is now trying to sublet a block “without ever having moved in”, the paper reported. Office values in London and in the US have shrunk amid rising interest and a tech sector pullback that are combining to create “the biggest challenge since the 2008 financial crisis” for landlords. “Expect the unexpected” might be a good motto to adopt for the new year.
