Lisney Office Market Update: Summer 2010


Lisney Office Market UpdateSummary

  • Market activity has remained constant
  • City Centre represented 40% of take-up in Q2
  • Rents have fallen 49.94% from peak
  • Landlords focused on income generation and tenant retention
  • Active requirements in the market total 90,000 sqm
  • Download Lisney Office Update Summer 2010


Market activity over the second quarter remained constant with take-up over the three month period totaling 25,399 sqm over 30 separate transactions. This was broadly in line with Q1 figures where 25,498 sqm over 36 transactions was taken-up. Given the levels achieved in the year-to-date, we estimate a total take-up  of approximately 90,000 sqm for the entire of 2010.

The largest transaction in Q2 was the letting of No. 1 Grand Canal Plaza (3,671 sqm) to Google. This was closely followed by Yahoo’s acquisition of 3,392 sqm in East Point Business Park and Merck Sharpe  & Dohme’s take of 3,263 sqm in Red Oak North in South County Business Park.   These three transactions represented over 40% of activity (by size) in the quarter and clearly demonstrate the importance of North American businesses not only to the property market but also to the Irish economy. Other US companies that completed deals include Bentley Systems  (1,271 sqm) in Park Place and Warner Chilcott (929 sqm) in Grand Canal Square.

The city centre represented 40% of all Dublin take- up, again similar to Q1. We anticipate that by year- end, city centre activity will end up at about 55% to 60% of all transactions in line with previous years.

Those with vacant property should consider targeting IT and related companies who, during the first half of the year, accounted for 35.7% (by size) of all activity. This is in marked contrast to previous years where the financial and professional services sectors were the predominant players in the market.  As matters stand, these sectors only accounted for 17.2% and 11.5% respectively of the first half of 2010 activity.


The level of vacant office accommodation across Dublin remains much the same at 22.8%, however, there are large differentials across the various geographical regions. The city centre currently stands at 18.6%, while the average suburban rate is almost 30%. These rates are far in excess of acceptable levels with most commentators agreeing that an overall vacancy rate of approximately 10% is required for the market to operate at equilibrium.


According to the Lisney rental indices, office rents continued to fall across all geographical locations in Q2. The overall index of Dublin rents has declined by 49.94% from peak in late-2007 with city centre values falling by the greatest level (-51.56%). Given these dramatic falls to date, it is difficult to see how further fails are possible and when a recovery does occur the pace of rental increase may be quicker than many expect.

Interestingly, most landlords are somewhat unconcerned with the compulsory upwards and downwards provisions in rent review clauses following the ban on upwards only clauses at the end of February. Many believe that in five years time when the first review is implemented, the market will be considerably better than today and the possibility of a fall in rent is very remote.

Lease Terms

Unsurprisingly, tenants continue to dictate terms and are demanding flexible leases with watered down repairing clauses, rental inducements and where possible fit-out allowances.   Most landlords are taking a pragmatic approach to tenant requests and are mainly focused on income generation and tenant retention. Those landlords who have worked with their tenants over the years and fostered genuine business relationships are faring better.


There are some concerns that the pipeline of new occupiers to the market is thinning and that there may be some fall-off in activity over the last quarter of the year.   It is hard to accurately assess whether this concern is well-founded and the next three months will give a better indication. However, there continues to be a number of companies with active requirements in the market and based on our research, we believe that there is a combined, genuine requirement of approximately 90,000 sqm. It may be that not all of these materialise into transactions but the overall number of companies seeking space must be seen as a positive.

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