Growth in commercial property rents slowed significantly in 2007 and may begin to fall this year, a report from estate agents Lisney said today.
The latest Lisney rental indices show that growth in the sector slowed from 12.5 per cent in 2006 to 5.1 per cent in 2007.
The indices show retail remained the best performaing sector, with rental growth of 8.8 per cent in the year.
This was driven by strong increases in Grafton Street and Henry Street in Dublin City centre where there were several new lettings, Lisney said.
But office rents, which grew by over 11 per cent in 2006, were "stagnant". The data indicate that Dublin office rents have now shown virtually no growth since June of 2006.
Head of research at Lisney Dr John McCartney predicted that sector may see Dublin office rents begin to fall this year.
Dr McCartney said: "We anticipate some slowdown in the demand for office space as corporate occupiers respond to a slowing global economy."
"With the financial services industry responsible for 45 per cent of Dublin office take last year, demand could be particularly sensitive to turbulence in global financial markets."
He said very strong office building activity will add around 310,000 square metres of new office space this year - equivalent to 10.5 per cent of the existing Dublin office stock.
"If the demand for office space moderates as we anticipate, rapid supply growth could cause vacancy rates to creep up. This would put downward pressure on rents," he said.