The local property management, research, and real estate agency, HWBC, found that rent levels for prime offices in the Dublin market rose by 24% in 12 months prior to the end of June in their latest survey and office market review. They predict it will rise another 20% by the year’s end. The prices are a reflection of the demand as 80% of the cost of a space are operational and lease rates. They’re placing the blame on a lack of new development.
“The continued rapid increase in rents is due to the fact that no new offices have been built in the past five years and, excluding pre-lets, there is less than 50,000sq m of new development under way in Dublin 2 and Dublin 4,” HWBC said in a statement.
It’s been so difficult to find office space for rent that prices aren’t expected to stop rising until at least the end of 2017, when new spaces that are being planned now will be completed. Tony Waters, HWBC’s Investment Director, believes that the outlook for Dublin’s office market will remain positive as the economy is expected to continue growing.
There are concerns the market will overreact to this demand and create a surplus of professional office space, leaving the city with the exact opposite problem in a few years. As of right now there is 5.5 million sq. ft. of office developments planned. Green REIT, another property firm, noted their concern over a possible oversupply. However, that concern is being downplayed by other leaders in the industry, according to a piece by the Irish news source independent.ie.
Temporary office spaces might be just what the city and business environment there needs at this time. These types of leases are generally extremely flexible as you can rent for an hour, week, year, 10 years, or anything in between. They would allow the economy to keep growing slowly as companies wait for more permanent, professional office space options to become available.