THE commercial property market remains in flux in a lot of sectors, but in one respect at least, it is full steam ahead.
The Dublin office market, particularly in the prominent areas around Dublin 2 and Dublin 4 is surging and shows no sign of slowing down any time soon.
While rates are still a long way off from the boom time, there is an appetite for deals which has been notable by its absence for years.
Office rents in the centre of Dublin had peaked at close to €60 a square foot in the middle of the last decade, but fell by at least half once the downturn came.
Now, as happens with any recovery, there has been a stabilisation followed by growth in the top parts of the capital.
While the "hub and spoke" style recovery that is usually seen has yet to take place, the hub part is certainly growing rapidly.
That has been reflected in the growth in rents for high quality office space in Dublin.
Barely three years ago, prime offices could be rented for less than €30 a square foot.
By last year that rate had risen to about €35 a square foot and now the expectation is for it to top €40 by the end of this year.
The main effect of these increases – 14pc in 2014 alone – has been to make building new office blocks feasible again.
The first one to start was on the site of the old Canada Life building on Dublin's St Stephen's Green, with construction beginning on a new office structure in that prime location.
A number of buildings have changed hands in recent months, in particular as the Natinoal Asset Management Agency and Ulster Bank begin to divest their extensive property portfolios.
The largest single deal was concluded earlier this month when a consortium of Green REIT, and US firms Kennedy Wilson and Pimco agreed to pay about €311m for Central Park in south Dublin. Perhaps more significantly, when One Grand Canal Square in the heart of the Silicon Docks changed hands late last year for €93m, it set a a new floor in the Dublin rental market, equating to a total of €700 per square foot. That was far in excess of the €500 or a foot that had been the market going rate for most of 2013.
Those kind of deals have placed a floor in the investment market, and served to compress yields. BNP Paribas's Peter Flanagan expects more deals to come and raises the possibility of major investors looking beyond the office market as they go in search of yields wherever they can get them.
"I'd say 2013 marked a turning point with €1.92bn worth of direct real estate assets changing hands and the market returning 12.7pc according to IPD.
"This year is likely to be equally active with Ulster Bank and NAMA under pressure to reduce their real estate exposure via consensual direct asset sales and loan portfolios," he adds.
Mr Flanagan expects the surge in value at the prime end of the market to continue through the rest of this year as well.
"We anticipate further rental consolidation in 2014 and indeed rental growth at the prime end of the market across all sectors. This combined with further yield compression will fuel capital growth," he believes.
The surge in the office market has got to the point where there is no limited availability for strong investment properties in that sector.
That is pushing investment buyers into the retail market, sayd Mr Flanagan.
"We expect retail investments to come into focus in 2014 as competition for office investments intensifies and parties look to acquire prime retail property well positioned for future rental growth," says.
"Prime Dublin central business district office rents are to reach €40 per sq ft by year end, making new office development financially viable for the first time since the collapse in the commercial market in 2008," adds Mr Flanagan, reflecting the higher confidence in the wider commercial market at present.
Apart from the prospect of an extended move into the retail market, what does the market expect to see happen in the investments sector over the next 12 months?
"There will be a few things, but the main ones for us will the continued growth of real estate investment trusts (REITs) and the emergence of other tax efficient investment vehicles for overseas players," he believes.
REITs weren't allowed in Ireland until two years ago when finance minister Michael Noonan changed legislation to allow them.
Now there are two in the market with more expected. Stephen Vernon's Green REIT has invested heavily already, while Bill Nowlan's Hibernia REIT is also making moves within the market. That is likely to continue, says Flanagan.
"Continued growth of REIT's and continued growth of tax led qualified investor alternative investment funds (QIAIFs), a preferred tax efficient platform of International investors," he said.
"If there is one key deal this year, it is for Grand Canal Square. That is likely to set a new benchmark for office yields in Dublin when it is offered for sale in the coming weeks.
The combination of modern Grade A Office accommodation, rents at market level (rack rented), a strong tenant line up (Facebook, William Fry & Capita), and prime location in the South Docks will ensure it is keenly contested. The remaining vacant space could also set new rental benchmark for Office market when let by the new owners," he adds.
It is clear the investment market in Dublin is on the way back. There is still a long way to go, particularly outside the capital, but after years of stagnation, there is at last a sense that things are finally on the move in the investment market.