Belfast commercial property

Research - 26/03/2018

Record year for office market activity across Ireland

After a slow first quarter, 2017 was a record year for office take-up across Ireland, breaking the four million sq ft mark for the first time to reach a combined annual total of 4.3m sq ft, according to our latest Ireland Office Market Report 2018.

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The take-up figure is 14 per cent above what was recorded in 2016 and 19 per cent above the five-year average, the report said.

Dublin city centre was the primary driver behind the record year, where volume increased by one-third year-on-year with 1.1m sq ft of space transacted during Q4 2017 alone.

Activity was spurred by a number of large deals, with five transactions accounting for a quarter of the city centre activity. The largest of these were LinkedIn’s lease of 152,000 sq ft at Lad Lane, JP Morgan’s lease of 128,220 sq ft at 200 Capital Dock and AIB’s lease of 115,260 sq ft at 10 Molesworth Street.

Galway fared best outside of Dublin with 2017 take-up increasing by almost a third on 2016's level.

Joe O’Donoghue, associate director of lease advisory at Lambert Smith Hampton, said: “2017 was an outstanding year for the Dublin city centre market. Take-up was almost 2.4m sq ft, up 33 per cent on 2016. There were five 100,000+ sq ft transactions during 2017 and grade A stock accounted for 58 per cent of take-up. The vast majority of activity was located in the central business district as supply is limited in the city centre outskirts.

“Prime headline rents are forecast to continue their upward trajectory, reaching €65.00 per sq ft by the end of 2018. While considerable delivery of new build stock is scheduled in the CBD, the shortage of further development land could lead to rents in this area increasing more quickly than the rest of the city centre in the next three to five years.”

The healthy levels of city centre development seen in recent years are set to continue during 2018, with 2.7m sq ft of new office space currently under construction and due for delivery in the next 24 months. Of this, circa 1.2m sq ft, or 43 per cent, is currently pre-let.”

Office market activity in Belfast finished 2017 in a strong position with take-up levels reaching 430,290 sq ft - 11 per cent above the five year average. The largest transactions during 2017 were HMRC’s pre-let of the 104,220 sq ft Erskine House, the completion of Concentrix’s new 72,000 sq ft headquarters on the former Maysfield Leisure Centre site, and Tullet Prebon’s lease of 34,692 sq ft across three floors at City Quays 2.

The completion of over 200,000 sq ft of quality refurbished space in 2017 was critical in meeting demand. The technology, media and telecoms (TMT) sector has been a key driver of demand in Northern Ireland, responsible for 35 per cent of take-up in 2017.

Stuart Draffin, head of agency at Lambert Smith Hampton in Belfast, said: “Demand for good quality office space remains strong in Belfast, with take-up in 2018 expected to exceed 400,000 sq ft for the third consecutive year. After robust rental growth in recent years, prime headline rents are forecast to stabilise during 2018 with only a small increase anticipated. Headline rents will reach £22.00 per sq ft by year end.”

He added: “It’s positive to see that there are definite signs of confidence in the market. In recent years development in Belfast city centre has been relatively healthy, although speculative development has been limited with new build projects predominantly driven by pre-lets. In contrast, at the beginning of 2018 four schemes are currently under construction totalling 496,220 sq ft, half of which is speculative development.

“Furthermore, there are a number of new office developments poised to begin and with demand being consistent, we anticipate that prior commitment from potential tenants will be forthcoming to initiate some of these large new build schemes.”

Click here to download the report

Belfast Infographic

Dublin City Centre Infographic

Dublin Out of Town Infographic

Galway Infographic


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