The following three articles from the Journal suggest a spike in office rents in certain parts of Dublin city. Although a welcome indicator, new office space is needed to mitigate against further increases that may affect costs and the ability of the capital to attract new companies. Suppy constraints have been noted by commentators such as available sites, planning and building control issues, financing and lead-in times to completion. The recent marked fall-off in commencement notices is a concern for business expansion in this sector and job creation in the capital.
In the following article from The Journal on 2nd September “Nosebleed office rents could force companies to ‘fringe’ of Dublin city centre” it’s suggested that spiralling rents in the capital due to lack of supply of office space may affect foreign direct investment (FDI) and competitiveness. Quote:
“The level of choice for tenants seeking more than 2,000 square meters of Grade A space is limited and getting worse. In the near term that will likely drive rents higher, and also mean some tenants look beyond the city centre and consider looking to older Grade B buildings
….Waters also warned that a shortage of quality offices will have implications for the wider economy “as current and future FDI projects are dependent of a reasonable supply of modern space in the right locations”.”
In an earlier article “Dublin office rent has grown by nearly 25% in a year “the increase this year in office rents was seen as symptomatic of years of inactivity in the construction sector due to the downturn, and lack of supply in the market. Quote:
“…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…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.”
In this article from June 11th 2014 “There isn’t enough office space in Dublin to fit all the new start-ups” a surge the number of new companies set up in 2014 has led to a shortage of office space, analysts have warned. A recent report from Savills (LINK) noted that 57,000 square metres of office lettings were signed in the first three months of 2014 – a 32% increase on last year. Quote:
“Figures…reveal that 4,438 new companies were set up in the first quarter of this year, an increase of 21% on the average across the past five years.
One-fifth chose to locate in either Dublin 1, 2 or 4, or in what has now been dubbed the Silicon Docks tech-hub.
…growth in commercial sectors is “very positive news for job creation and overall economic rejuvenation…A balance between supply and demand is needed to ensure “the long-term survival of new business start-ups”.