According to the latest Dublin office market report from Savills, a continued lack of newly constructed space coming to the market, combined with a sustained demand for offices in prime central locations, is set to result in upward pressure on prime rents in the city in 2013, which currently stand at €310 per sq m (€28.75 per sq ft).
According to the latest Dublin office market report from Savills, a continued lack of newly constructed space coming to the market, combined with a sustained demand for offices in prime central locations, is set to result in upward pressure on prime rents in the city in 2013, which currently stand at €310 per sq m (€28.75 per sq ft). The international real estate advisor notes that while there are already examples of higher rents being achieved for small suites, this will widen across the size spectrum as the year progresses and is likely to become more pronounced in 2014.
Savills research records office take-up in Dublin during 2012 at just over 137,000 sq m, which has led to a further drop in the city’s vacancy rate to 20.2%, down from 21.6% at the same time in 2011. This city wide rate masks the very low level of prime Grade A vacancy in the city centre area which stands at 5%.
Roland O’Connell, director at Savills Ireland, comments: “Q4 12 saw the highest level of quarterly take-up in the Dublin office market for the year at 51,000 sq m and indeed the highest quarter since 2008. This demand is set to remain strong for prime grade A space and well-located grade B stock and with no new space set to come to the market before 2015 at the earliest we are now beginning to see a significant impact on supply levels, which will inevitably result in reduced incentives and upward pressure on prime rents.
”An uplift in rents is required in order to justify new development or proper refurbishment of older buildings, however it is also important to note that a rent spike to unsustainable levels would damage the competitiveness of the economy as a whole.”
Savills expects that demand for space in 2013 will remain on par with or slightly exceed that of 2012 and also highlights that well located and well-fitted grade C stock is also becoming more attractive to the cost conscious tenant.”
In terms of overall take-up, Savills confirms that there has been a continued occupier preference for space in Dublin 2 and 4 with 44% of office take-up during 2012 located in these two markets. Dublin districts 1, 3, 7 and 8 accounted for 25% of last year’s take-up, while 3% was recorded in the International Financial Services Centre reflecting the low amount of space available in this area.