DOUBLE DIGIT GROWTH IN DUBLIN’S PRIME OFFICE RENTS

DOUBLE DIGIT GROWTH IN DUBLIN’S PRIME OFFICE RENTS.

By Ruth Baily

CRBE latest figures published for Q2 2014 shows continuing surge in rent for office space in Dublin city. This increase is fuelled by the continuing supply shortage. Supply shortages have seen prime rents in the prime Dublin 2 and 4 locations rise by 15% in the first six months of 2014 and by 46% when looked at on an annualised basis. Vacancy rates in the capital continue to fall and the Grade A vacancy rate in the Dublin 2 and 4 post codes now stands at 3%. Vacancy rates fell in all Dublin districts during Q2.

73% of lettings in Q2 were in Dublin city centre with 26% of new tenants in the computer and hi-tech sector and 21% public sector tenants. There were 41 transactions in all in Q2 with 19 of these Irish companies and 10 US companies. All of this augers very well for job creation and the continuing recovery however the supply shortage needs to be tackled quickly before it becomes a bigger problem and makes it difficult for companies to locate in Dublin.    

The recent promise of fast track planning for the docklands area by Dublin City Council (DCC) should go some way to alleviating the problem and satisfying demand. However it will take 18 to 24 months for any projects, once planning is granted, to be completed. It is therefore important that DCC move quickly to identify appropriate sites and move the planning process forward.

Access to finance for large scale projects is also a major stumbling block. Currently banks will only loan up to a maximum 60% of the capital needed to bring a project to fruition, and in some cases the maximum they will loan is as low as 40%. Therefore a developer is expected to finance a project from their own resources by anything from 40% to 60%. This is just not possible. The construction industry has been through and extremely difficult time during the downturn and those companies which have survived do not have reserves of capital to access. It is imperative that capital is made available to allow construction to start to address the supply shortage in the office space in Dublin.

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