'Slow' growth for office rents despite market recovery
TOP office rents are set to rise by only 10pc this year, according to estate agents HWBC, even as the market continues to recover.
In its annual review of the office market, the firm said about 179,000sqm worth of office space was taken up in 2013, as rents in prime areas rose by as much as 15pc.
That 179,000sqm of uptake was about a 20pc increase on 2012. While HWBC expects that level of uptake to continue, the firm said the rise in rental rates would slow this year.
HWBC's 10pc prediction is one of the more bearish for the commercial market in 2014. Office rents are currently at about €35 per square foot in prime areas, and rising. CBRE estimates rents could gain 14pc this year, while analysts at Davy see prime office rents topping €50 – an increase of some 40pc.
HWBC director Paul Scannell said his firm expected to see construction return to the office market this year.
"Rental levels of prime new developments are likely to reach levels high enough to justify investment in new development. You can expect cranes and building activity to become a more common sight in Dublin this year after several quiet years," he said.
"Whilst international firms have been the drivers of the recovery in the Dublin office market, we anticipate more active domestic demand in 2014. A number of Irish professional service firms are reviewing their space requirements and, with quality office space now in short supply, further capital and rental appreciation are expected this year," Mr Scannell added.
Vacancy levels fell marginally in 2013 to 17.5pc from 18.4pc previously. That is a huge drop compared to 2010, when nearly a fifth of offices were vacant.
Prime office space accounted for some two thirds of the capacity, HWBC claimed.