Prime Dublin office rents forcing tenants elsewhere

Businesses are increasingly looking outside Dublin’s central business district for office accommodation as rents continue to climb in the most sought-after areas, according to a report on the capital’s office market.

The two most in demand postcodes — Dublin 2 and Dublin 4 — have seen rents continue to spiral higher in recent months making setting up shop increasingly more expensive.

According to CBRE director, Alan Moran, rental prices in prime Dublin postcodes have now surpassed the €510 sq m mark and forced companies to look elsewhere.

“As rents in the central business district continue to escalate with prime headline rents now in the order of €511 per sq metre (€47.50 per sq ft) in Dublin 2/4, we are increasingly seeing potential occupiers looking to alternative locations in the city as well as suburban options,” Mr Moran said.

“Indeed, 38% of take-up in the first quarter of 2015 occurred in the suburbs with five of the 10 largest lettings signed in Dublin in the three month period being located in the suburbs,” he said.

Some 38,000 sq m of Dublin office space was taken over in the opening quarter of the year, according to CBRE’s latest report, in 64 transactions.

This represents the highest number of leasing transactions completed in a single quarter since the first quarter of 2008, which is surprising considering the scarcity of accommodation in some locations of the city.

“Following a bumper fourth quarter, office take-up in the capital reached a healthy volume in the first quarter of 2015 with over 38,000sq m of leasing transactions signed in the quarter albeit many of the transactions completed were relatively small in size,” said Mr Moran.

Meanwhile, Hibernia Reit yesterday announced that it had completed the first phase of its Wyckham Point apartments in Dundrum, Co Dublin ahead of time and on budget.

Phase one of the project comprises 29 units, which are a mixture of one, two and three-bed apartments.

Some 27 of the 29 completed units have been let to a leading international technology company based in Dublin at rents which have grown strongly to stand on aggregate 9% ahead of September 2014 rental values which will provide €600,000 per year for Hibernia.

Additionally, Hibernia has secured bookings for the rent of a further 35 units which are expected to be completed by the end of June, also at rents 9% ahead of September 2014 values, which would produce gross rent of €700,000 annually.

Hibernia acquired loans secured against the partially completed Wyckham Point development as part of its acquisition of a loan portfolio from Ulster Bank in February, 2014.