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International Financial Services Centre
Irish Commercial Property
Positive news from the Dublin office market, as a new report from Savills predicts rising rents for landlords in the sector for the coming year. In its latest report into the sector Savills says that rising and sustained demand for prime office space combined with continued lack of new space coming onto the market, will result in upward pressure on prime rents in the city in 2013 from the current level of 310 Euros per sqm.
According to the firm office take-up in Dublin during 2012 reached just over 137,000 sqm, 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. However, according to the report the city-wide rate does not tell the full story, as prime Grade A vacancy in the city centre area is much lower at just 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 sqm 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 foresees similar or slightly more demand for office space this year than last 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.
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