Tech demand for flexible office space in Dublin on the wane

Technology companies have taken up less flexible office space in Dublin this year on the back of a global slowdown in the industry, according to Savills, while professional and financial services have picked up the slack.

A new report from Workthere, the property agent’s serviced office advisory division, highlights “a notable shift” in demand in the year so far. Tech companies accounted for just 30 per cent of the deals for flexible office space in the city this year compared with 45 per cent in 2022.

Professional and financial services firms, meanwhile, have accounted for 57 per cent of transactions for serviced offices and co-working spaces, up from 40 per cent last year.

Most of the activity within the flexible office space market has been focused on the south city centre, Workthere said. Dublin 2 is emerging as “a hub” for flexible office space, it said, with 66 per cent of leasing activity located in the postcode in the year so far.

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Rates are also ticking upwards with the average price of desk rental increasing from €590 per month last year to €610 excluding VAT while lease lengths are also increasing. Historically, flexible office terms were typically six to 12 months, Workthere said, but the average now stands at 21 months, up from 17 months last year.

“The nuanced changes within the flexible office sector, especially in this transformative business environment, underline the agility and momentum of the industry,” said Kim Hogan, head of Workthere Ireland. “Dublin, especially the Dublin 2 area, remains attuned to the evolving demands of the modern workforce, epitomising adaptability in response to the transforming landscape.”

Overall, tech companies, which accounted for more than half of all office space leased in Dublin between 2017 and 2019, accounted for just 8.4 per cent of lettings in the Dublin office market in the three months to the end of September, BNP Paribas Real Estate said last week. This is the lowest level on record and is expected to drive the vacancy rate in the capital city to 16 per cent next year.