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Businesses are snapping up Dublin offices that haven't even been built yet

Savills chairman Roland O’Connell said that pre-letting is emerging because it delivers benefits for all parties in the market.

40 Molesworth Street
40 Molesworth Street
Image: Savills

A NEW REPORT says that offices in Dublin are being rented quicker than some are being built.

A report from property consultants Savills says there has been a surge in office ‘pre-letting’ – the practice of tenants committing to lease contracts before a building has even been constructed.

According to Savills’ research, pre-lets accounted for 44% of all the Dublin office space leased in the last quarter of 2016. In Dublin 2 and 4, where the demand for business space is highest, pre-lets accounted for an even greater proportion of the market – 61%.

Savills chairman Roland O’Connell said that pre-letting is emerging because it delivers benefits for all parties in the market.

“Although enough Grade A space is available to accommodate around 2,200 office workers, occupiers with large space requirements or very specific locational preferences are facing an increasingly limited choice of buildings.

Pre-letting opens up a wider set of possibilities for tenants and some are willing to forego immediate occupancy in return for buildings that tick the right boxes in terms of location, fit and finish.

According to Dr John McCartney, Director of Research at Savills, in today’s era of tighter bank lending developers and investors often need to have tenants signed-up before they can access the development finance needed to build-out their schemes.

The phenomenon does, however, dampen rental growth as some developers may be willing to offer competitive rent deals to ensure their projects get funded and completed.

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