A New Cycle For Dublin Offices Means More Small Deals And Early-Mover Advantage

After a moribund 2024 in which office sector investments totalled a paltry €508M across 37 deals, 62.3% below the 10-year annual average, Dublin’s commercial real estate market has entered 2025 with signs that decisive investors could get ahead of the cycle.

With the political cards close to being dealt between the incumbent parties, interest rates on a slow drift downward and Ireland’s robust economy as a backdrop, the real estate industry is feeling more confident about the coming year.

But recovery won’t look like previous rebounds. Instead, it is more likely that the comeback will come from the god of small things. 

CBRE said three of the four biggest accountancy firms and the main technology groups in Dublin have completed what it described as “generational moves” in the last few years, settling on new long-term HQ space in the city. Therefore, it predicts that the next wave of take-up will be driven by smaller deals from legal firms, smaller technology companies and the public sector.

“Overall, while challenges persist, the combination of occupier demand, further anticipated interest rate cuts from the ECB and a strong Irish economy, Dublin's office investment market is set for robust growth in the coming years,” Ronan Group Real Estate Chief Investment Officer Aidan Gavin said.

“The outlook for the investment market for 2025 remains optimistic, driven by several key factors,” Gavin added. “Ireland has a robust economy with unemployment running at just 4.4%, household savings at an all-time high, the exchequer running a surplus and GDP forecast growth of 4% for 2025. With the formation of a new Irish government imminent, this all points to an economy that is attractive to international investors.”

More specifically, the office sector, which has been the most impacted in the last two years, is beginning to turn a corner, Gavin said. There has been a rebound in takeup as larger office occupiers provide more clarity on their hybrid working policies and push to get people back into the office.

“The changing needs of occupiers is something we will have a key focus on in 2025,” he said. “Office properties that provide real environmental and social value, superior access to public transport and give tenants the optimum blend of physical and virtual experience will be the most successful in attracting staff and, in turn, occupiers and investors.”

His optimism comes amid signs of a slow recovery. Across all asset classes, total investment volumes reached €2.4B in 2024, according to JLL — a 30% increase from 2023 but 43% below the 10-year average, with the retail sector the standout performer.

“Despite the increase in year-on-year volumes, investor inertia persisted, particularly in core money,” JLL Ireland Capital Markets Associate Director Sandra Walsh said in a statement. “However, we see reasons to be optimistic as macroeconomic conditions continue to stabilise as we enter 2025. The return to growth will likely take greater momentum as the year progresses.”

And that recovery is likely to be firmly focused on prime office locations, sustainable buildings and the ability to attract international investors, many of which have the option to deploy capital across multiple European markets. That fact made the decision by some French funds to reenter the market in 2024 especially encouraging, as did the deal by Germany’s Deka Immobilien to acquire 40 Molesworth Street for €37M. 

“Deka remains optimistic about the core office sector in Dublin, as evidenced by the recent acquisition of 40 Molesworth Street in May 2024 for our open-ended real estate fund WestInvest InterSelect,” the investor told Bisnow in a statement. “This investment underscores Deka's long-term confidence in this market. Despite the high average headline vacancy rates, we believe that opportunities exist for the right asset in the right location. We expect improvements in the leasing market in the short to mid term, particularly for high-quality ESG properties in prime locations. Deka Immobilien is committed to selectively identifying and capitalising on the right opportunities.” 

Similarly, active domestic investor Fine Grain said it believes the best properties remain strong investment prospects for the year ahead.

“Fine Grain Property’s recent acquisition of Connaught House underscores our commitment to investing in prime, sustainable workspaces that attract top-tier occupiers,” Chief Financial Officer Kevin Mahony said.

“By focusing on innovation clusters like those along the Grand Canal, we can deliver sustainable returns while contributing to Dublin’s economic growth and its reputation as a European leader in business and innovation. Dublin’s unique combination of a highly skilled workforce, pro-business policies and strong FDI flows continues to solidify its status as a global business and innovation hub.”

Believers in a recovery will also be buoyed by leasing results just out for the fourth quarter, with takeup totalling nearly 548K SF, according to CBRE Ireland.

This brought full-year takeup to more than 2.25M SF, representing an increase of approximately 66% versus 2023, with the focus on prime-located, sustainable stock. Last year’s total takeup is 12% below the long-term average for the market.

The largest leasing deal in the final quarter was at 1 Adelaide Road where Deloitte agreed to a long-term lease for 155K SF for its new Irish headquarters. The deal accounted for 28% of the quarterly takeup. In another notable deal, Wells Fargo took 25,600 SF at the newly completed Coopers Cross in north Docklands.

Dublin’s office vacancy rate remains high, but these large lettings, along with the completion of leasing deals at developments such as Wilton Park, The Shipping Office and Cadenza, plus the acquisition of long-vacant stock like the Seamark Building at Elm Park by the HSE earlier in the year, is reducing the amount of available A-rated buildings in the city centre, CBRE said.

Over the coming 12 months, 667K SF of Dublin office stock is due to reach practical completion, the lowest level since 2015, with nearly 60% of this already prelet, which should mean the vacancy rate starts to decline.

“Occupier sentiment has improved significantly with bifurcation remaining a key theme in the market,” CBRE Ireland Head of Research Colin Richardson said in a statement. “Moves by EY, Stripe, Deloitte and Workday [which should close in H1 2025] into new HQ space in Dublin have shifted sentiment drastically over the last nine months. Vacancy has now peaked and will start to decline this year, as office completions slow.” 

That is an opinion echoed by international investor Hines, which also said demand will continue to shift toward prime.

“The Dublin office market has bottomed out, with Grade A vacancies on a clear downward trajectory,” Hines Ireland Managing Director Brian Moran said. “As a lack of new developments signals a potential supply crunch in prime locations from 2028 onwards, we see a unique opportunity to capitalise on brown-to-green strategies in super-prime locations.” 

The slivers of good news have contributed to a more positive investor picture, JLL Head of Research Ireland Niall Gargan said, pointing to 53% of investors surveyed in November 2024 anticipating improved market conditions over the next six months, up from 32% a year prior.

“In addition to growing sentiment in the market, 2025 will be advantageous for those first out the gate. Investors deploying capital in 2025 are likely to see an early-mover advantage in terms of returns that will diminish as this new cycle matures,” Gargan said. “Intensifying supply shortages as completions slow will amplify competition for quality existing assets as more investors reenter the market.

“We are already seeing signs of a new liquidity cycle. More capital is showing up to the table and bidding on opportunities, and institutional investors are returning to the market with a renewed appetite for real estate.”