What do you do with an ageing warehouse that sits on land worth up to £1.5 million per acre? Knock it down and build multi-storey office buildings is the answer if your unit is in Sandyford Industrial Estate.

The old estate was developed in the 1960s and 1970s and carried warehousing and light industrial units. Land values have soared in recent years however, at about the time that landowners began to consider what to do about updating or replacing older buildings.

"Historically, it was an industrial park," says Nicholas Corson, a director of Finnegan Menton. The units had limited but high-specification office accommodation, usually in a single-storey building. Then, land values climbed and owners began looking at the option of going for office accommodation that can attract two, three and even four times the rental value per sq ft compared with warehousing. "Now what is happening is that planning is being given for multiple storey buildings," says Mr Corson. The older units are being knocked to the ground to make way for three to six-storey office blocks. "What was an industrial estate is becoming an office park."

Mr Corson puts the change in use down to rising property values. "The land values have increased so significantly that these industrial units are going out to the west of the city, where land is cheaper and they are going over to high value use." Continuing strong demand for office space is another factor, according to Stefan Foster, a surveyor with Gunne's commercial division. "It is down to pure demand. Demand is absolutely phenomenal at the moment."

He estimates there is a current shortfall of about 1.5 million sq ft of office accommodation in the Dublin area. The recent influx of multinational companies has increased the shortage, and both Enterprise Ireland and the Office of Public Works have been in the market too, adding to the demand for space.

The Economic and Social Research Institute in a recent report suggested that the sector would grow by about five per cent per annum over the next three to four years at least. "Given that supply stays in balance with demand, you could expect an office uptake of between one million and 1.5 million sq ft per annum," says Mr Foster.

The Sandyford area will see at least 2.3 million sq ft of office accommodation coming on stream over the next five years, and the actual figure is likely to be much higher.

More than 600,000 sq ft of space is already under construction in the 200-acre Sandyford estate. Another 1.7 million sq ft is being put together in the Central Park development on the Legionaries of Christ site at Leopardstown Road by the Clyde Road Partnership, which involves Treasury Holdings, Jermyn Investments plc of the UK and David Arnold.

Interestingly, many quite large development plans were agreed without attracting planning appeals, largely because they are taking place in a mature industrial park setting well away from housing. Green Property Company is developing 350,000 sq ft of high-quality office accommodation in phases on the old four-acre Alert Packaging site in Sandyford Industrial Estate. It attracted no appeals and the first block will be ready for fit out in under 12 months.

The former Odenberg industrial site is being developed into four-storey and six-storey office blocks offering about 130,000 sq ft, again without appeals. The Central Park development has attracted just two appeals despite its size, says Mr Corson. The project is being handled by Finnegan Menton and Lisney.

Treasury's John Ronan and Richard Barrett, along with David Arnold, are involved in another office development project on the substantial seven-acre site in the Sandyford estate, formerly owned by Allegro.

The entire site will be used for office accommodation. There is a large 62,000 sq ft block on the estate adjacent to Burton Hall, and the nearby 26,000 sq ft Burton Court building under construction.

The old Elliott site at Sandyford has become Blackthorn House, offering 48,000 sq ft, which is being taken up by Eircell. Another site under construction is Ballymoss House, a four-storey block which will include 66,400 sq ft. The old Odenberg site will be developed into about 130,000 sq ft of office accommodation.