Around two million square feet of modern office space should become available this year, but supply will emerge more quickly in the suburbs, according to a new survey. The survey also found that demand for office space remains strong and supply is currently tight.

Conducted on behalf of property investment group Dunloe Ewart, the survey says that of the space to be completed this year, 53 per cent is in the city centre, with much of that development taking place in the extension to the International Financial Services Centre (IFSC).

"The proportion of city centre space falls to just 30 per cent of the completions in 2000 and will not rise above 40 per cent in any later year," it says.

The survey points out that most larger schemes in the docklands will not be ready until 2002. It says that to date the level of speculative building - building before a tenant has been secured for the development - has been in line with, or below demand levels.

However, the survey warns that there is potential for a large surge of supply as a large number of schemes are either in the planning process or which have planning permission already. It says that if all these projects proceed in the next 18 months there is a risk of oversupply in the market.

"If, however, developers monitor the market carefully and respond quickly and appropriately to a sharply rising vacancy rate by postponing starts, the office market will develop in an orderly fashion with oversupply becoming a serious problem," the survey says. It also says the market is set to become more competitive during the next two years, particularly in the suburbs. "It will be a further two years before significant supply in the city centre is available."

The survey, which was conducted by Jones Lang LaSelle and Indecon concludes that prospects for the office market remain strong, provided the supply of new space is carefully tailored and the economic boom continues.