An international study which tracks the performance of prime office rents in 95 major business locations has identified Dublin as the “standout market” in the first three months of this year following a 20 per cent increase in Grade A rents.
Over the past 12 months, Dublin has experienced an even greater growth of 31.3 per cent, largely because of a rapidly falling supply of high quality space and continued demand from international firms.
Dublin’s stellar performance in Q1 is all the more surprising because the JLL Global Office Index found that rents increased globally in the same period by only 1 per cent following two dismal years.
The annual rental performance rankings put Dublin ahead of San Francisco Peninsula (+20 per cent); Jakarta (+18.4 per cent); Oakland-East Bay, San Francisco (+16.8 per cent) and Singapore (+11.9 per cent).
Dublin’s rental growth was significantly ahead of the global figure of +1.7 per cent and the European averages of +0.9 per cent. The strong growth came from a bottomed-out market when rents dropped 50 per cent lower than at the peak.
Because the JLL index concentrates on prime rents only, the findings do not reflect what is happening in the entire market. While prime rents in Dublin have bounced back, secondary office accommodation has not shared the same level of growth in the same period.
Hannah Dwyer, head of research at JLL, said that while the 31.3 per cent rent increase was very strong in any market, it needed to be considered in context of the overall historic rental performance.
The study related back to Q1 in 2013 when prime rents were just above the bottom of the market at €344 per sq m (€32 per sq ft). These rents were still 30 per cent lower than the €645 per sq m (€60 per sq ft) recorded in 2006/2007.
The current prime rental level of €409/€452 per sq m (€38/€42 per sq ft) only applied to a select number of buildings where there was a limited choice for occupiers.
Ms Dwyer said it was unrealistic to apply the growth tables to every building in the city when 60 per cent of the vacant space was located in Grade B and Grade C premises.
JLL is forecasting that Grade A rents will increase to €484 per s q m (€45 per sq ft) before the end of 2014. The secondary market is expected to show only minimal rent increases.
