Some 136 office buildings covering 12m sq ft are being planned for Dublin over the next five years, according to Savills.
The advisory firm’s Skyline Survey report says if even half advance to completion, Dublin will have enough office accommodation to reap any potential benefit of UK’s decision to leave the EU.
The report notes 39 schemes are currently under construction, of which 13 have been prelet; 62 have received consent but are not yet on site; and 35 are in the planning stages.
The majority of construction will take place in Dublin’s central business district of Dublin 1, 2 and 4. Most schemes will be new builds, with refurbishments and extensions comprising 18% of the pipeline, and the replacement of existing buildings comprising 39%.
The report also notes that lack of speculative funding is a recurring issue in the market, with the majority of development in the short-term being undertaken by REITs, funds or private equity backed by pre-funding. Irish bad bank Nama is providing full funding for 9% of all schemes and another 5% via joint ventures.
Andrew Cunningham, director of offices at Savills Ireland, said: “Between 2010 and 2014, office construction in Dublin came to a complete halt for the first time since records began – something that was almost unique to the Dublin market and not experienced in any other western capital city. Take-up, however, was strong and as a result, the vacancy rate tightened quickly, causing rents to rise sharply. This has made office development viable again.”
“Although the numbers look quite high, the reality is that the current pipeline is constrained by available equity and debt funding – despite the demand/supply imbalance – and we are observing large-scale postponement of schemes, especially those in need of prelets to commence on site. As a result, there is little chance of us reaching a point of oversupply any time soon.”
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