Green Reit chief: Dublin office market at 'full tilt'
Green Reit CEO Pat Gunne has moved to downplay concerns expressed by businessman Denis O'Brien that the Dublin office market is in the grip of a bubble, but has cautioned that a combination of rising interest rates and inflation is set to become a "headwind" for the real estate sector.
Speaking to the Irish Independent following the publication earlier this week of Green Reit's latest interim results, Mr Gunne said he believed the office market in the capital was currently "in relative equilibrium" with vacancy levels of 6pc being largely matched by the pipeline of supply. Commenting on the Grade A office vacancy rate of 2pc, the Green Reit chief added that: "You're really starting to a see a market that is operating at full tilt".
Comparing Dublin's performance to that of the UK's main regional cities, Mr Gunne said: "Dublin is an incredibly vibrant market. If you look at the take-up [of office space] last year, it was equivalent to about 65pc to 70pc of all the regional UK markets; so that's Glasgow plus Edinburgh, Manchester plus Birmingham, plus Bristol, plus Leeds. Sometimes we miss that point from an Irish perspective, but it's a tribute to the IDA, which has been incredible in selling Ireland abroad".
Mr Gunne was responding to comments made by Denis O'Brien at the recent World Economic Forum in Davos in which he expressed his view that developers were now "over-building" offices in the capital.
But while the Green Reit CEO differs with Mr O'Brien on that point, he told the Irish Independent that his company is now "monitoring the longer end of the interest rate curve" on the basis that the low interest rate environment of the past number of years had been a "big support" to Green Reit since its launch in 2013 .
He said: "The European interest rate curve, the impact of tapering combined with inflation given that we're working off quite full employment numbers... it's probably going to start being a headwind as opposed to the tailwind that it's been up to now."