Knight Frank report suggests Dublin office accommodation shortage shows ‘signs of easing’

The rapid increase in Dublin office rents is beginning to ease as new capacity begins to trickle into the market, according to research.

A report by property consultants Knight Frank suggests the first batch of developments since the financial crash is beginning to ease the pace of commercial rent inflation in the capital.

Prime office rents in the capital have risen over the past five years from €32 per sq ft to €54 per sq ft, according to the the consultants.

While demand is likely to remain strong with additional, if limited, foreign direct investment inflows expected post-Brexit and robust domestic demand, the availability of space that has driven rates up since 2011 may begin to ease.

The prediction carried in Knight Frank’s Global Cities 2017 Report is similar to others’ such as DKM economic consultants which recently pointed to housing supply “edging up”.

The take-up of office space in first quarter of the year stood at 62%. This indicates that 2016 levels could surpass the previous year which was the second strongest on record.

The report highlights Dublin as “a global hotspot for international occupiers and investors alike” and highlights the “unprecedented investment flows to Dublin” from US vulture funds.

“The US private equity funds were the first to spot the opportunity that the Dublin market represented, with Blackstone, Lone Star and Kennedy Wilson each deploying significant levels of capital,” the report reads.

“With the market now considerably de-risked, pension funds, primarily from Europe and Canada, and sovereign wealth funds from Asia, are accounting for the next wave of capital in the expectation that Dublin will continue to deliver superior risk-adjusted returns over the coming years.”

The report attributes the city’s economic recovery post-recession to the ‘three Ts’ of tech, talent, and tax.

The technology industry which has grown with the arrival of multinationals such as Google, Facebook, and Twitter has been the main driver of growth while also accounting for the largest take-up of office space.

In addition to Dublin’s tech ecosystem, the city has emerged as “an international hub” for a range of industries from aircraft leasing, financial services and media.

On the talent front, the capital’s availability of skilled young workers is lauded with 40% of the population under the age of 29. Ireland’s 12.5% corporation tax rate was identified as a “strong pull factor” for companies looking to invest.