Behind the headlines: Dunne's Hume House planning permission success defies logic
Published 05/08/2010 | 05:00
The decision to give planning permission to Sean Dunne's Hume House development in Ballsbridge is a prime example of how the planning system is dysfunctional and how little connection it seems to have to the basic laws of economics.
The office vacancy rate in Dublin is currently standing at 23pc, one of the highest rates of empty building stock in Europe. Yet Dunne's large Hume House office development is set to push up the supply even further.
Dunne's development was bought four years ago for €130m and has presumably been written down in value since the start of the property crash.
But the decision to give it planning permission gives an uplift to Dunne and his lenders, regardless of what demand eventually materialises. That demand is, of course, inevitable and Dunne has a better chance of getting and keeping tenants than landlords holding older building stock in central Dublin.
What Dunne's building will do is push older stock out of the market and these buildings will rapidly empty, creating so-called 'dead zones' in the middle of prime office land.
While the planning authorities are there to consider more than just the economic demand for buildings, the Hume House decision seems a perplexing one.
For example, what demand there is out there tends to be for smaller accommodation rather than the larger buildings Dunne is set to offer.
However as the vacancy rates linger, Dunne is arguably not going to be the main loser, additional office accommodation in Ballsbridge is simply likely to increase the empty buildings in Dublin's less salubrious locations.