There has been a “staggering” acceleration in Dublin office rents since the start of 2014, according to Lisney’s latest office update.
It reports city centre office rents up 16 per cent since January and up 24 per cent over the past year. Rental increases have also spread into suburban markets despite the concentration of letting activity in the city centre which accounted for 64 per cent of total activity in the first half of 2014.
Lisney notes that, for those trying to source good quality office space, the list of options is short while supply is unlikely to improve soon as little new construction is underway.
Despite rising rents, the amount of office lettings in Q2 2014 was “light”, according to Lisney, with just 35,400sq m (381,042sq ft) of space completed across 40 different buildings. When combined with Q1, the cumulative take-up for the half year is 100,500sq m (1,081,773sq ft).
This is about three months ahead of where the market was at the end of Q2 last year. There was also a significant number of office lettings agreed or due to be signed.
Lisney is forecasting that take-up will reach 185,000sq m (1,991,323sq ft) by year end. This would be an 8 per cent increase on last year.
The largest transaction in Q2 2014 was The Observatory on Sir John Rogerson’s Quay where Riot Games took 4,230sq m (45,531sq ft).
This was followed by the Children & Family Agency’s acquisition of 2,755sq m (29,654sq ft) at Heuston South Quarter.
Other large city lettings included Groupon taking 1,590sq m (17,114sq ft) in Connaught House on Burlington Road and Merrion Stockbrokers taking 1,580sq m (17,006sq ft) in Guild House in the IFSC.
The largest suburban transaction was in Parkwest where Allianz Worldwide Care bought a 1,820sq m (19,590sq ft) building. This acquisition follows two other purchases by this occupier in Q1 and brings the total space acquired by it this year in Parkwest to 4,770sq m (51,343sq ft).
At the end of Q2, there was approximately 595,600sq m (6,410,985sq ft) of office space available for occupation in Dublin. This translates into about three and a half years’ supply and a vacancy rate of 20.7 per cent, according to Lisney.
But this rate masks differences between regions with, for example, the rate in the city centre at 14.4 per cent and falling.
