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OFFICE RENTS IN Dublin have grown by almost one quarter in the space of a year, new research by property agency Savills has found.
The rapid increase in the price of office space in the capital can be partially attributed to the depths to which the market sank during the recession, Savills head of office agency Roland O’Connell said.
“Effective rents fell by more than 50% during the downturn and, in that context, it is not surprising that we are seeing something of a bounce-back.”
Despite this, O’Connell said that there was a real danger from the elevated rate of growth in rental prices.
“While increasing commercial rents are welcome insofar as they reflect the underlying strength of the economy, we would not want to see this rate of growth continue in the long term.”
He said that the knock-on implications of high rent prices could hurt Ireland’s competitiveness and the attractiveness of Dublin as a location for mobile international business.
Incentives on the way out
The strong demand for office space has led landlords to cut back on the incentives they are offering potential clients, typically a period of rent-free occupancy.
The roll-back on rent-free periods has combined with the upward headline rent trajectory to give Dublin the highest ‘net effective’ rent growth in Europe, at 39.3% in the last 12 months.
This compares with an average European growth rate of 5.1%.
Dublin was one of only seven European markets across Europe in which the average rent-free period fell, along with international hubs such as Hamburg, London, Dusseldorf and Paris.
Director of research John McCartney said that increased demand has allowed landlords to row back on incentives, with the average rent-free period on a standard office lease halving in the last year.
O’Connell said that the upward trend was an acute reminder of the need for more construction activity to boost the supply of prime office space in Dublin.
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Another clear indication that the economy is improving and possibly at a faster pace than some believe
Hard to believe that Sin Fein still believe the economy is doomed and there are zero signs of a recovery.
It’s absolutely key now that developers get the credit needed to add to the supply side and therefore avoid over heating of the market. Govt have a job here in my view
Economic recovery is bad news for SF.
They will run the country down at every opportunity.
Can you imagine their horror in 2016, budget back in surplus & economy growing again.
It’s another property bubble.
It’s absolutely crazy in the residential market. I signed a 12 month lease on a 1 bed flat in the city centre last week but it took me a few weeks to find it.
They (landlords and letting agents) are actually having viewing nights, where 10 or more people view the kips at once.
My rabbit hutch was €300 cheaper 12 months ago.. its a sign paddy greed is setting in yet again and we know what happened last time.
a rebound is inevitable, but there are still a lot of vacant buildings about.
So, the “to let” signs are fake then?
Dublin is too overcrowded and concentrated, there should be greater incentives for companies set up base outside of Dublin
Dublin is not in the slightest bit overcrowded.
There are thousands of acres of derelict brown & green field sites within the M50.
Amazing how our economy is doing so well according to the government, estate agents and landlords yet the ECB warned our politicians our economy is not doing well at all.
We have one of the biggest debts of any country in the world. sinn feinn are not being negative about the economy there being realistic. We cant afford another little building bubble. It would break ireland totally. And the sooner most people in this country realise that the better.
i wonder where will families go when renting a 2 beds will cost 1600 per month ( give it another 6 months)
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