Dublin office rents may lift again in 2013
Widespread growth in Dublin's office rents could resume as early as mid-2013 and Dublin office take-up this year could reach 110,000sqm, - 10pc ahead of earlier forecasts.
Dr John McCartney, of the Central Statistics Office, said that the rent increases could be seen between mid-2013 and mid-2014 based on his estimates that Dublin's office Natural Vacancy Rate (NVR) is around 15pc. Should the ESRI's high economic growth scenario be attained it could take three years to absorb the current over supply, he said last night in a paper to the Statistical and Social Inquiry Society of Ireland
With a current vacancy of 23.1pc, rents will continue falling "until this figure is reduced into line with its natural level," he says.
However at the traditionally accepted NVR of 7pc it would take eight years to absorb the current overhang which would delay rental growth until 2018.
On the other hand he calculates 284,024sqm of vacant space would need to be digested to return to a 15pc NVR and this could be achieved within four years.
But he acknowledges that the timescale for a return to even a 15pc NVR could also vary with absorption rates.
"Under the ESRI's low economic growth scenario just 62,263sqm of vacant space might be digested each year and it would take until mid 2015 to absorb the current excess."
He attributes Dublin's 15pc NVR to a number of factors including: the office building boom which increased total stock of modern offices by 129pc in the 11 years to 2009, and local planning policies which encouraged greater office development in the suburbs.
Meanwhile, agents CB Richard Ellis and Jones Lang LaSalle report an upturn in office lettings, with the former forecasting that they could reach 110,000sqm for 2010, which would be 10pc ahead of forecasts.