Dublin Office Vacancy Misleading: Stranded Assets Drive 18.6% Rate, Rents Rise for Green Buildings
Dublin's 18.6% office vacancy rate is driven by «stranded assets»—buildings failing to meet modern sustainability standards. This mirrors trends in London, New York, and Sydney, where demand for green buildings is high and rents are rising. Irish owners must invest in retrofits and improve ESG credentials now to avoid economic obsolescence and ensure future lettability.
Dublin's 18.6% office vacancy rate is misleading; buildings are empty not due to lack of demand, but because they fail to meet current energy efficiency and market standards. This phenomenon, termed «stranded assets» by Savills, means properties are exposed to early economic obsolescence. This trend has already impacted London, New York, and Sydney, indicating a short window for Irish owners to act.
Pressure on operational performance, including greenhouse gas emissions and water usage, comes from public-sector targets and EU corporate sustainability reporting directives. Poor BER ratings, fossil fuel heating, and lack of on-site renewables increase running costs and carbon footprints, which occupiers must disclose. Evidence from London shows 68% of 2025 lettings were in BREEAM excellent/outstanding buildings, with prime rents rising 6.8% to £105.26 per square foot, and top rents reaching £145 per square foot for best-in-class sustainable spaces.
Similar patterns are seen in Manhattan, where trophy rents rose to $197 per square foot, and Sydney, with prime net effective rents up 9.3% by Q2 2025. In Dublin, major corporates like BNY Mellon, State Street, and Citi, along with State bodies, are moving to more sustainable buildings, often paying higher rents for lower operational carbon footprints and compliance with net-zero commitments.
Irish asset owners face three implications: value, lettability, and capital expenditure timing. ESG credentials are crucial for institutional investors, creating a «green premium» or «brown discount.» The pool of tenants for poorly rated buildings is shrinking, as professional services firms are assessed on sustainability. Deep retrofit costs have risen since 2022, making early investment critical to avoid assets becoming unlettable. Owners must assess operational carbon intensity, credible pathways to zero-emission standards, or exit strategies by 2026 to ensure assets remain viable by 2030.