Rent for top-level office space in Dublin will need to hit a record €80 per square foot to justify the next round of new development in the city, according to HWBC.
So-called prime rents are set to top €70 by the end of the year, the broker said amid ever-increasing demand for space in the heart of the capital. That itself would be a new record. Rents for grade A office space in Dublin stand at about €67.50 at present.
“The outlook for the second half of the year remains positive, particularly for prime energy-efficient space in the CBD [central business district] as the supply of standing stock continues to be absorbed by corporate tenants,” said Paul Scannell, HWBC director of agency and business. “We expect recent developments will be substantially leased or reserved by year-end.”
Rents of €80 per square foot would be an unheard-of level for the Dublin office market. While some bespoke deals do go above the headline rate for the city, few, if any, have come close to €80. Rents peaked at about €65 per square foot during the Celtic Tiger years two decades ago.
Pre-lets – once a hallmark of the Dublin market – are likely to return, HWBC said, as businesses seek to guarantee space in favoured developments. About two-thirds of the 800,000sq ft of space under construction at present has already been rented out, with a new wave of building needed to meet demand.
While office availability in the city centre remains tight, companies are taking more space outside of what was traditionally seen as Dublin’s central business district. On Tuesday, US tech firm Klaviyo said it had signed terms to take space at One Le Pole Square near Ship Street in Dublin 8.
The surge in rents comes despite a wave of so-called grey market office space coming to the market as big companies that had taken on huge amounts of space in recent years seek to sublet or offload altogether at least part of their lettings.