Dublin benefits despite high rents

OFFICE space in Dublin is as much as 60% more expensive than Cork and Belfast, but Ireland’s low corporation tax rates means companies are still being attracted to the capital.

Prime office rent in Dublin is about €35 per square foot and it is about €15 to €20 in Cork.

A report from commercial real estate firm, CB Richard Ellis, that despite office rents and business costs generally being considerably higher in the Irish capital than in many competing cities over the last 10 years, Dublin accounted for a greater proportion of foreign direct investment and office letting activity than other cities. CBRE said this is primarily due to Ireland’s low corporate tax rate at 12.5%.

CBRE say that lower rent and wage costs in Belfast is a threat to Dublin, particularly if corporation tax in Northern Ireland is reduced to make it more comparable with the Republic.

However, CBRE said Cork would be even more competitive than Dublin given its lower rent rates.

The report compared the office market in Dublin with a number of cities that it competes directly with for foreign direct investment such as Birmingham, Manchester, Edinburgh, Glasgow, Amsterdam and Belfast.

Executive director with CB Richard Ellis, Marie Hunt, said: “In comparison with other cities that we compete with directly, Dublin has attracted more than its fair share of corporate office occupiers over the last 10 years.

“Much of this investment has been attracted by the 12.5% corporation tax rate.

“However, in addition to the favourable corporation tax rate, Dublin should now be able to capitalise on the major improvement in competitiveness achieved over the last 18 months, including more competitive rent and occupation costs, lower wage rates and lower house prices.”

At one stage over the last decade, office rents in Dublin were 65% more expensive than in the other cities reviewed but still attracted a greater proportion of international office occupiers.

Managing director at CB Richard Ellis, Guy Hollis said: “In addition to seeking out opportunities to attract more foreign direct investment into Ireland, such as investing further in broadband infrastructure and improving air access, the biggest challenge now is to maintain the competitiveness we have achieved over the last two years once the economy starts to improve, as it inevitably will.”