Dublin prime office rents back to 2006 levels, with room for growth
Prime office rents in Dublin have returned to their 2006 peak of €60 per sq. ft - and now have the potential to reach €65 per sq. ft by 2018, new research from Jones Lang LaSalle (JLL) suggests.
According to the latest Perspective on the Dublin Office Pipeline report, which JLL has just published, rents for Grade A city centre buildings have already rebounded - effectively doubling from the bottom of the market, which was reached in the final quarter of 2012.
Based on current and projected levels of supply and demand for office space, the firm's research predicts prices per square foot of €62 in 2017 and €65 for 2018 and 2019.
While JLL's head of research Hannah Dwyer said prime office rents in the capital had already experienced a period of what she termed "unprecedented growth", she qualified her remarks by noting that the rent levels now being achieved varied between €55 and €60 per sq. ft and were "very building specific".
"Rents achieved are based on location, specification and lease flexibility," Dwyer said.
"Our forecasts suggest that rents will remain steady with some evidence of further growth in exceptional cases as new pipeline comes on stream," she added.
According to JLL, there is currently some 3.5 million sq. ft of office space under construction across Dublin. With 41pc of that space already pre-let, just 2.1 million sq. ft now remains available for letting.
For an occupier looking for a new-build office in 2016, there are just two options available, in the Velasco building on Lower Grand Canal Street and 21 Charlemont at Charlemont Place.
Separately, CBRE's latest market review shows that the level of Dublin office take-up for the second quarter of 2016 is down 35pc on the same period last year.
According to the report, 65 individual lettings amounting to a combined 37,199 sq. m (400,406 sq. ft) of office leasing activity took place up to the end of June, bringing the total office leasing activity so far this year to 89,641 sq. m (964,887 sq. ft). In the first six months of 2015, more than 122,000 sq. m (1,313,197 sq. ft) of office space was taken up in the capital.
In a statement accompanying the latest figures, CBRE noted that the year-on-year decrease "masks a number of large deals which are currently under way and due to sign" in the third quarter.
Commenting on the overall demand for office space in Dublin, CBRE office agency director Alan Moran said: "Although it remains to be seen to what extent the Brexit result will impact on demand for office accommodation in the capital in the medium term, the overall volume of demand for offices rose quarter-on-quarter to 247,000 sq. m (2,658,685 sq. ft) at the end of the second quarter."
In terms of the rents now being achieved, CBRE's findings differed slightly to that of JLL.
While they noted that prime headline values of €60 per sq. ft were now being quoted for a number of buildings in Dublin's Central Business District (CBD), CBRE's market review said there was no "firm evidence" of this having been achieved.
As a result, it said it was leaving its prime rent series unchanged at the mid-year point, at €57.50 per square foot.
The firm noted that potential occupiers of office space were obtaining better terms for refurbished accommodation as opposed to new buildings in the current climate, and that this was easing rental pressures to some degree.
CBRE said prime office investment yields had remained stable during the second quarter of 2016 at 4.65pc.
Sunday Indo Business