The latest Dublin Office Market Review from property agent HWBC shows major lettings to Google, Facebook and LinkedIn last year helped to mask a weakening in demand for smaller commercial property sizes

Whilst the level of demand for 100,000 sq ft plus deals is a positive, HWBC argues it is masking a weakening in demand for smaller lot sizes, with space in the under 30,000 sq ft range slower to fill, reflecting a more cautious outlook from business in sectors such as finance, professional services and life sciences.

This is according to the latest Dublin Office Market Review from property agent HWBC.

The increasingly cautious outlook may be Brexit related.

Major lettings to Google, Facebook and LinkedIn last year helped to mask a weakening in demand for smaller commercial property sizes.

Last year Facebook’s 823,000 sq ft letting of the former AIB Bank Centre building in Ballsbridge, was the biggest deal of the year, in a Top 10 that also included lettings by tech companies Google at Boland’s Quay and, LinkedIn at One Wilton Place.

Co-working giant WeWork accounted for four of the Top 10 deals, and the co-working sector accounted for 12pc of the total market take up for the year.

A relatively new phenomenon in Ireland, co-working spaces are becoming increasingly popular in Ireland.

Looking forwards, HWBC is forecasting that prime office rents in Dublin will remain at their current level of around €60 to €65 per square foot, a sign that the market is maturing.

Elsewhere, the Dublin suburban office market still in growth phase, with rents expected to exceed €32 per sq ft this year, and the potential to peak to around €35 per sq ft in this cycle in locations like Sandyford and Central Park.

Rental growth and demand is again being driven by US foreign direct investment companies taking additional space in the suburbs as an alternative and lower cost location for staff.

With Brexit just 56 days away, it remains a continuing point of uncertainty in the market, potentially contributing to the weakening in demand for space from some domestic sources.

Although over 50 companies have declared for Ireland as a post Brexit location, the UK leaving the European Union has had "limited" positive impact to date on overseas demand for space in Dublin, with most requirements on the smaller scale or modest expansion of operations already here, the report found.

Paul Scannell, HWBC director and head of offices said: "Demand for suburban office space will continue to be strong, and is likely to see headline rents over €32 per square foot this year in the most in demand areas".

"The impact of Brexit has been more limited than was anticipated, however were there to be a disorderly 'no deal' Brexit in March, it is possible that some UK corporates might take more radical action in terms of their location of staff and offices, with a corresponding increase in Brexit-led demand in the Dublin office market."