Renting space in one of Dublin’s prestige office quarters is likely to rise by at least 15 per cent by the end of the year, according to a leading property agency.
Driven upward by the Irish economic recovery and the shortage of suitable space, global real estate services provider Savills claims that rents in Grade A office blocks in prime Dublin 2 and Dublin 4 districts are almost certain to top €55 [£43] per square foot during 2015 — and may well go even higher.
By the end of last year some office space in the Irish capital was being marketed at €48 [£37.5]. With rents rising steadily over the past two years reaching €55 would mean a year-on-year increase of 15 per cent.
“Prime office rents in Dublin increased by over 30 per cent in 2014 — more than doubling in three years — and, if we factor in tightening incentives, net effective rents are rising even more explosively,” commented Savills’ head of research, John McCartney, who added there were a variety of factors fuelling the increase in rental values.
“With the Economic and Social Research Institute forecasting 5.3 per cent gross domestic product growth this coming year, office demand will remain very strong.
“But with no new supply in the pipeline, and considering the poor quality of much of the remaining vacant space, my view is that rents will be bid up to €55 per foot by the end of next year,” said McCartney.
Savills forecast that the shortage of space is likely to reach a crisis level long before next December. The vacancy rate in Dublin city centre for major companies wanted to move into the capital is effectively zero, while the IDA — the agency responsible for industrial development in Ireland — has repeatedly warned the lack of suitable space may cause the country to lose out on valuable foreign direct investment.
“Some new construction has begun, but it is not likely to come on line until late next year at the earliest,” said the Savill’s executive.
In the retail sector, McCartney said rents were more of a “slow burner” and that: “Given the strong statistical relationship between employment growth and retail sales, and with more than 40,000 new jobs likely to be created next year, I expect the recovery in retail rents to become stronger and more widespread over the course of 2015.”
