The central bank warned that the flood of new offices on the market is running far beyond the post-pandemic demand weakened by the major shift to remote work.
His analysis raises a big question mark as to whether the market can absorb the new supply. This suggests that demand needs to be doubled from an average of about 150,000 square meters of Dublin office space occupied in 2020 and 2021 to meet the supply operating between now and 2024. doing.
Analysis shows that there are currently more than one million square meters of new offices in various stages of development in Dublin alone, half of which are expected to be completed between 2022 and 2024.
To fill that space, we need to return to pre-pandemic levels, but as more staff work from home and companies become more motivated to adopt remote work, there is some uncertainty about future office space requirements. I am. According to the central bank’s latest semi-annual financial stability report.
“There was evidence that the office market was undersupplied before the outbreak of Covid-19, but structural changes in the way people and businesses work after that have led to a market that absorbs this level of additional space. There is a high degree of uncertainty about the capabilities of the company, which is a relatively short period of time, “said the new report.
The excess of new supply is partly due to the backlog accumulated by site closures and other pandemic-related disruptions.
Central bank analysis does not quote data from other major centers, but both Cork and Limerick have a large number of new offices under development prior to the pandemic.
Foreign direct investment is the biggest driver of large-scale new office leasing in Dublin, which has survived the early stages of the pandemic, but is currently largely uncertain about the size of new offices needed to accommodate employees. There is certainty.
The largest office schemes underway in Dublin include Johnny Ronan’s new Facebook campus in Ballsbridge and Salesforce Tower at IFSC, both built to meet the demands of individual clients.
The commercial real estate market has seen higher vacancy rates in both the retail and office sectors as a result of lower rents and asset values since the beginning of the pandemic, and accelerated transition to online shopping during the blockade and Covid. , Has already been hit hard. , But it was offset by rising demand for logistics parks and residential areas.
