Almost 1 million square metres of modern office space has traded in Dublin since the beginning of 2013 – equivalent to 27% of the entire office stock in Dublin – according to a new report from Savills Ireland.
The rate at which office buildings have changed hands reflects a shortage of supply as Nama and the lending institutions put the assets associated with non-performing loans up for sale.
Rapid growth in services employment has also created strong occupier demand and low vacancy rates.
The proportion of space traded in the central business district stands at 38%.
Institutional investors and REITs have been the biggest buyers of office property since the start of 2015, accounting for 41% of modern office purchases by volume and 80% by value.
The average lot size for these players was just under €50m. In sharp contrast the next most prolific group was private individuals who bought at a much lower average price point of €3.6m.
A notable trend has been the steady increase of foreign office buyers – these accounted for just 29% of spending on Dublin offices during 2013, but this rose to 62% in 2015 and 68% in Q1 2016.
Dr John McCartney, economist and director of Research at Savills Ireland, commented: “We expect prime headline office rents to increase by 14% by the end of the year, with further growth through to the end of 2018 and possibly beyond. This, along with rock bottom bond rates and continued volatility in global equities markets, should continue to attract capital into Dublin offices.”