A new survey reveals that take up of office space in the fourth quarter of 2021 jumped to near record levels as occupiers started to take up postponed leasing decisions with the easing of Covid restrictions and concerns.
HWBC said its 2021 Dublin Office Review showed that 1.4 million square feet of space was leased in the second half of last year - almost treble the level the same time a year ago and the highest second half take up since 2018.
Independent property firm HWBC said the final quarter of the year represented 60% of activity for the whole year.
A large proportion of the increase was down to two big deals in Dublin 2 - Tiktok's leasing of the 216,000 square foot Sorting Office from Mapletree and KPMG’s pre-let of 288,000 squre foot at Hibernia REIT’s proposed redevelopment of Harcourt Square.
HWBC noted that prime office rents have stabilised at around €57.50 per square foot and said it expects rental growth to return over the next 12 months as more demand and activity returns to the market.
It also said that tenant incentives are still a feature of all leasing agreements with no further softening in terms predicted this year.
Lease flexibility is becoming an increasingly important issue for occupiers along with "green buildings" with low energy use, it added.
HWBC said the overall vacancy rate largely remained steady during the pandemic with a slow-down in construction offsetting reduced tenant demand to keep the market from over supply.
The company's outlook for 2022 assumes that after two difficult years take-up of space will return towards long-term averages.
There remains the proviso that Covid doesn't throw out a new variant, but it is realistic to hope that occupiers can now focus on how to use office space post pandemic and what model best suits their return-to-work plans," it added.
Paul Scannell, HWBC’s Head of Offices, said that the lifting of restrictions and gradual return to the office should support the recovery into 2022.
"The new OECD corporation tax agreement provides a degree of certainty that will help FDI investors make long-term commitments," Mr Scannell said.
"This sector is leading the charge in attributing higher value to buildings with strong sustainability characteristics, with an emerging value premium in terms of rent and capital values between older buildings and modern stock with low carbon footprints," he added.
