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Inevitable drop in take up amidst COVID-19 uncertainty

16/07/2020
The latest research from Cushman & Wakefield confirms that, not unexpectedly, take up in the Dublin office market slowed significantly in the second quarter. A total of just 14,650 sq m was occupied in the three-month period, compared to the long-run quarter average of 46,185 sq m. 
The latest research from Cushman & Wakefield confirms that, not unexpectedly, take up in the Dublin office market slowed significantly in the second quarter. A total of just 14,650 sq m was occupied in the three-month period, compared to the long-run quarter average of 46,185 sq m. 

At the mid-point juncture of the year, take up sits at 59,950 sq m, a level unseen since 2013, the last of the downturn years before recovery took hold in 2014. 

Commenting on the quarter, Ronan Corbett, Head of Offices at Cushman & Wakefield Ireland, “It will be no surprise that transaction volumes during Q2 were down significantly on previous years. COVID-19 effectively paused the Dublin office market. However, as lockdown measures have begun to lift, we are starting to see a recovery in activity. The remainder of 2020 will be tough, but there are reasons to be optimistic for 2021. Our Cushman & Wakefield live Demand Tracker is showing over 270,000 sq m of unsatisfied active demand in the market as of early July. This is a remarkable figure and shows the confidence occupiers, and in particular international occupiers, continue to have in Dublin as a location of choice.”

With take up figures impacted by lockdown measures, attention switches to other indicators to try to capture any impact from COVID-19.  One such gauge is availability. At the end of June, 363,550 sq m of space was available, equating to a vacancy rate of 9.5% overall, or 7.6% in the CBD. Net vacancy rates are also lower again, for example, just 4.2% in the CBD. 

Availability increased 10% in the quarter, however, also remains 10% below the same period in 2019. Importantly, the release of second-hand stock back to the market remained in line with the quarterly average, indicating the market is yet to see any rise of note in market churn arising from COVID-19. This may change as the year progresses and casualties of the pandemic become more apparent.  

As another important indicator, the volume of space signed at the end of the quarter remained largely in line with the opening quarter; 85,800 sq m of standing stock, with a further 264,850 sq m of signed space under construction. However, the volume of space reserved did decline. Although changes to reserved space is normal, the overall decrease may reflect some occupiers adopting a ‘wait and see’ approach to their requirements as they asses the possible economic fallout from COVID-19 and also how working from home may alter their space needs. 

Despite limited transactions, prime rents remained unchanged in the second quarter at €673 per sq m. However, as the second half of the year progresses, uncertainty in the market combined with the outlook for economic indicators sees the potential for modest downward pressure. 

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 51,000 employees in 400 offices and 70 countries. In 2018, the firm had revenue of $8.2 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.ie or follow @CushWakeIRL External Link on Twitter.