Agents predict rise in office demand in autumn
On the face of it, the Dublin office market appears to be running out of gas but agents are pinning their hopes on a recovery in momentum in the second half of the year.
So far this year, take-up of office space has dropped to 61,337sqm -- a drop of 30pc compared to the first half of 2011 according to agents Jones Lang LaSalle (JLLS).
Furthermore JLLS says office rents have fallen slightly in the second quarter of the year and estimates prime headline city centre rents at between €301 and €323 per sqm.
On the other hand, CBRE says that prime city centre headline rents have stabilised but estimates them at a lower average of €296 per sqm.
Then again James Nugent, managing director of Lisney, says that the most that can be achieved for prime city centre offices is a rent of around €320 per sqm.
Nevertheless he forecasts that prime city centre offices could see double-digit growth over the next 12 months due to a fall in the vacancy level from 16.8pc at present to below 15pc as the year progresses.
JLLS estimates prime suburban and city edge rents as having dropped slightly in the last three months to a range of €108 to €172 per sqm.
CBRE says prime headline rents in the suburbs range from €134.50 per sqm in the western suburbs, to €172 per sqm in the southern suburbs.
Deirdre Costello, director of JLLS, points out that the second quarter of the year showed an improvement on take-up compared to the first quarter, and furthermore she says a further 27,000sqm of space is reserved for the third quarter of this year "which will hopefully evolve into signed deals next quarter".
As a result she is hoping that more than 93,000sqm of offices will be taken up for the full year -- a sharp drop on the 158,000sqm seen last year.
CBRE are slightly more bullish, forecasting take-up of as much as 100,000sqm for this year. But Savills are even more bullish. "A level of 110,000-120,000sqm is possible depending on the level of pressure on businesses to postpone office re-location decisions due to cost pressures for the remainder of 2012," says its director Roland O'Connell.
CBRE also signals pent-up demand among cash investors for vacant or part-let office buildings priced for less than €5m in Dublin city centre and says this could "result in more office properties being offered for sale over coming months".
One of the more optimistic new developers is West Register, the Ulster Bank investment offshoot which has sought planning permission to demolish McConnell House, next to the Charlemont Luas station and build a part four and part six-storey over basement office building with a gross floor area of 4,270sqm. The application follows its other recent application to redevelop the Audi centre in Ballsbridge as another 4,400sqm office block.