TWO MID-YEAR office market reviews out today show that lettings in the first half of 2008 held up remarkably well despite the economic downturn.

Roland O'Connell of Savills HOK reports that take-up in the period reached 129,000sq m (1.388 million sq ft) with almost half of this in the Dublin suburbs. A further 105,000sq m (1.13 million sq ft) of new space is due for completion by year end, bringing the total up to 200,000sq m (2.153 million sq ft).

Savills expect the pace of development to fall to 168,000sq m (1.808 million sq ft) in 2009 and 110,000sq m (1.184 million sq ft) in 2010. The vacancy rate in Dublin is estimated to have moved from 13.4 per cent at the end of 2007 to 14.4 per cent. The volume of vacant space at 427,000sq m (4.56 million sq ft) had risen mainly due to completion of new space.

Savills also warned that there would be a slowdown in the pace of take-up in the second half of 2008 as occupiers adopt an increasingly cautious approach.

Paul Scannell of agent HWBC says that activity slowed in the second quarter with a reduced number of new enquiries which will impact on transactions for the second half of 2008.

Occupiers were now reviewing space requirements in response to the weaker economic conditions with potential moves increasingly put on hold until markets settle down. There were still a large number of significant occupiers seeking HQ space but the overall quantum of deals was down, reflecting reduced demand from smaller firms.

Large space requirements from Deloitte, Citco, KPMG, Bank of Ireland, IDA and AIB accounted for over 120,000sq m (1.29 million sq ft) of demand but there were concerns that the timing and scale of some requirements may be under review. Scannell said that financial services have been hardest hit by market volatility and reduced demand from this sector was impacting on the Dublin market.