The take up in Dublin office space dropped by 63% in the third quarter of this year compared to the same three months last year, new data shows.
According to BNP Paribas Real Estate (BNPPRE) Ireland less than 29,000 sq m of space was taken in the period between July and September
"Firstly demand has shifted away from tech firms which traditionally have bigger office requirements," said Director of Research at BNPPRE.
"Tech accounted for just 8.4% of take-up between July and September – its lowest share since quarterly records began."
"Secondly, occupiers are taking advantage of remote working to reduce their office space."
The average size of a deal during the period dropped from 1,510 to 655 sq metres.
The shift towards more sustainable and better-quality buildings is also a factor in the market, BNPPRE says.
Some organisations are reducing floorspace as a means of funding their movement over to greener but more expensive buildings.
12.3% of this year's office take-up has been by organisations downsizing, BNPPRE says, and 72% of the space taken has had a BER rating of A.
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Buildings are also being used as a means of attracting and retaining the best talent too.
"Full employment and hybrid working have made it harder to recruit, engage and retain staff," said Keith O’Neill, Head of Office Agency at BNPPRE.
"This is causing firms to ensure that their buildings provide the most welcoming, flexible and efficient working environment possible for staff when they are onsite."
BNPPRE now expects that the office vacancy rate, which now stands at 12.5%, will peak at 16% next year as additional office space is completed without having a tenant organised to take it up.
"Over the last 18 months we have been cautioning that an oversupply situation was coming, and this has proved to be correct," Mr McCartney said.
"However, the construction pipeline has never gotten too far ahead of demand, so peak vacancy is likely to be quite manageable by historical standards."
"However, although this will be a relatively shallow downswing, it might take longer to come out of in the upswing because remote working has weakened the relationship between jobs growth and office demand."
