Dublin rents hit bottom with ‘no sign of growth’

PRIME rents in Dublin have hit bottom, according to one of the country’s top commercial property agencies but there are no signs of rental growth for this year.

Jones Lang LaSalle said prime rents could stay at their bottom for a while but it said as supply of prime product tightens, there should be a return to growth in the next 24 months.

It said it is likely the vacancy rate in the capital will fall in 2011 but without a significant increase in take-up it is unlikely the rate will go below 20%.

The company, in a review of the Dublin market said however after a “particularly depressing year in 2009”, 2010 saw a 69% increase in activity on 2009 levels.

Total take up for last year was 123,298 m² and it said it is 15 years since it has seen levels like this, the last occasion being in 1996.

Director with Jones Lang LaSalle, Fionnuala O’Buachalla said the difference between 2009 and 2010 is that many occupiers spent 2009 trying to identify opportunities to reduce their costs and developing strategies whereas 2010 was the year they implemented them.

With a vacancy rate of 23% tenants had plenty to choose from and as a result were able to achieve very flexible lease terms, generous rent-free periods and bottom of the market rents.

In particular, the introduction of the ban on upwards only rent reviews also had a positive impact.

The vacancy rate, however, continued to stay at 23% last year, the highest-ever seen in the Dublin market.

Director Jones Lang LaSalle, Deirdre Costello said: “We are moving into a market with a two-tier vacancy rate.

“The 23% rate includes stock aged 30 years and older which in many cases is actually un-lettable as landlords have not spent any money upgrading or refurbishing.”

“If you take out this older product, this automatically brings the vacancy rate down to 20%.”

Dublin 2 had the lowest vacancy rate in the market of 17% and the highest level of activity at 35% of take up.