Take up in the Dublin office market is expected to exceed 1.9 million sq ft by the end of the year, an increase of 19 per cent from last year. It is estimated that the present vacancy level is around 2.6 per cent of the total stock. A significant amount of the supply completed so far this year has been pre-let.
Rents and capital values are continuing to increase and the absence of speculative development on a large scale suggests prices will continue to grow, according to a report by the Palmer McCormack estate agency. Take up in the first six months of this year was almost 1.17 million sq ft of net internal floor area.
Citibank's 200,000 sq ft deal was the largest transaction over this period and was the main contributor to the IFSC's dominance, which represented 38.7 per cent of the total take up. However, even without this transaction, the IFSC would have accounted for the largest part of the office market.
The next most important regions were Dublin 2 and Dublin 4 respectively.
Figures show that the rapidly expanding information technology sector accounted for 29.17 per cent of take up by the corporate sector, representing almost one third of activity in the market.
The take up of office space in 1998 alone is likely to exceed occupancy in either of the periods, 1980 to 1984 or 1985 to 1989, according to the report.
There is currently around 405,000 sq ft of built office accommodation available to let in Dublin. Based on a stock of approximately 15.5 million sq ft, this represents a vacancy rate of 2.6 per cent - the lowest level of availability for eight years. As a percentage of total stock, it is the lowest level since the early 1980s.
The report states that prime rents are approaching levels of £25 per sq ft and capital values are continuing to move ahead.
AMEV House in Blackrock recently sold by tender for a reported price of around £355 per sq ft.
Developers have responded cautiously to the demand and there is almost 1.01 million sq ft of accommodation under construction in the Dublin area and is likely to be available in the next 12 months.
The greatest proportion of this is in Dublin 2.
More than 330,000 sq ft of office space, the majority of which is under construction, is also available in the south suburbs. Sites with and without planning permission will be available, but restrictive planning permissions will make it difficult for many occupiers to locate there. Supply will be diminished by the end of the year and space shortages in certain regions are likely to be particularly acute.
Meanwhile, Dublin Docklands offers enormous potential due to the number of development sites in the area.
"We therefore await the finalising of tax incentives in the Docklands and hope these will stimulate office development, which will be required to facilitate the further expansion of the services sector of the economy into the 21st century," says the report.
