Prime Dublin office rents to rise by 30pc
Rent for office space in the prime Dublin office market is expected to rise by as much as 30pc this year.
Independent property firm HWBC said numbers have already jumped by 15pc so far this year and are well ahead of the 10pc forecast.
In a review it said that the rapid rise will force some tenants to look to the fringes of the city centre and suburban locations to find affordable space.
“We thought 2014 would be strong, but not as strong as this, and that’s why we have upgraded our full year forecast to 30pc,” said Tony Waters, investment director at HWBC.
“The level of choice for tenants seeking more than 2,000 square metres of Grade A space is limited and getting worse.
“In the near term that will likely drive rents higher, and also mean some tenants look beyond the city centre and consider looking to older Grade B buildings.”
The average deal size for new leases this year was 950 square metres, with 100 transactions taking place in the period.
However four out of the top five deals were struck by US technology companies including Amazon - which took 6,500 square metres at the Burlington Plaza in Dublin 4 - Oracle and Dropbox.
HWBC said demand for office space in the first half of the year was 95,200 sq metres, which is 50pc ahead of the same period in 2013.
The vacancy rate at the end of June stood at 16.25pc, compared to the peak rate of 22.8pc in 2010.
Mr Waters said the principal winners here will be buildings located in city fringe locations in Dublin 1, 3, 7 and 8, which have struggled to attract tenants to date.
“The older Grade C stock will still not interest the majority of occupiers without significant landlord investment to modernise,” he added.
“Any shortage of quality offices will have implications for the wider economy as current and future FDI projects are dependent on a reasonable supply of modern space in the right locations.
“This makes NAMA’s recent plans to focus on fast tracking development in a Special Development Zone in Dublin’s Docklands all the more welcome."