As a dedicated Chartered and Registered Building Surveyor immersed in the bustling landscape of Dublin, I find myself in a unique position to provide a firsthand account of the current state of the city’s commercial property market. Whilst 2023 was seen by many in the sector as the worst “annus horribilis” since 2009/10, the last few months have been nothing short of dynamic, with trends and shifts that warrant attention especially with a positive outlook anticipated in 2024 and beyond.
Resilience Amidst Uncertainty:
Dublin’s commercial property market has displayed remarkable resilience in the face of global uncertainties. Despite economic fluctuations, the city’s real estate continues to draw interest and investment, across all sectors, a testament to its enduring appeal.
Anticipated investment activity for Q3 2024 is poised to surge, driven by the effects of the European Central Bank’s interest rate decisions. Prime rent assumptions for Dublin office spaces are expected to remain stable. The projection of declining interest rates this year is prompting sales or a regearing of premises to better adhere to ESG strategies and standards.
The projection of declining interest rates throughout the year is prompting property sales or the renegotiation of leases to better adhere to ESG (Environmental, Social, and Governance) strategies and standards.
Demand for Flexible Spaces:
The ongoing evolution of work culture has resulted in a surge in demand for flexible office spaces. With a growing number of businesses embracing hybrid work models, commercial properties that offer adaptability and innovative design are gaining traction. The ability to cater to diverse working preferences is becoming a key factor in property value.
In 2023, Dublin’s serviced office space grew by 5%, resulting in over 36,000 desks or 167,225 square meters of available serviced office space in the city.
Tech Hub Magnetism:
Dublin’s status as a European tech hub remains a significant driver of the commercial property market. The influx of tech companies and startups seeking a foothold in the city has fuelled demand for office spaces equipped with cutting-edge technology and collaborative environments.
Hybrid work arrangements and remote work have become firmly established, yet the necessity for office spaces remains. Demand for offices outside Dublin regions has been encouraged by mandates from the IDA and increased space requirements from the HSE, particularly in the MedTech and healthcare sectors.
Sustainability on the Rise:
Environmental consciousness is shaping the landscape of commercial real estate. Businesses are increasingly prioritising sustainable and eco-friendly spaces. As a building surveyor, I’ve witnessed a growing interest in retrofitting projects aimed at enhancing energy efficiency and reducing environmental impact.
Urban Regeneration Initiatives:
Dublin is undergoing a noticeable transformation, with urban regeneration initiatives breathing new life into older commercial properties. Building owners have a responsibility to refurbish and reposition their stock, as these revitalisation efforts not only contribute to the city’s aesthetic appeal but also provide a fresh lease of life to historically significant structures.
Supply and Demand Dynamics:
While demand remains robust, supply constraints are a reality. Limited availability of prime commercial spaces has led to competitive leasing scenarios. This imbalance has prompted businesses to strategically plan their real estate decisions, considering factors such as location, amenities, and long-term growth potential.
Dublin’s commercial property market is a fascinating landscape, and as we gaze into 2024, confidence is notably bolstered by interest rate reductions, a stabilisation in construction costs, and the potential for rental growth. The most obvious opportunities lie in revitalising tired offices situated in prime locations, boasting substantial rental returns and yields. Additionally, there’s anticipation of a surge in assets across various sectors, prompted by the volume of extensive vendor surveys conducted in 2023.
I remain excited about the challenges and opportunities that lie ahead. Navigating this dynamic market requires a keen understanding of the evolving needs of our clients and the ability to adapt to a rapidly changing environment and we would be thrilled to offer our assistance in guiding you through your portfolio and assets.
Our expertise spans advising on dilapidations strategies, exploring retrofitting options, and showcasing how our innovative tools can establish early-stage feasibility and design analysis, providing valuable insights to inform your decisions.
Tony Grant is Head of GIA’s Dublin office with over 30 years commercial real estate consultancy experience throughout Ireland, mainland Europe and the UK. Tony is a trusted advisor providing robust strategic advice for owners, occupiers, investors and developers enhancing the value of commercial assets whether owned, leased or funded and as they are acquired, constructed, refurbished or sold.