The Dublin office market is in for a further year of strong growth in 2017, according to HWBC.
The property agents predict that headline rents will hit €65 per sq.ft. (€700 per sq.m) by the end of 2017, this would reflect growth of 8% on top of the 2016 end year rent.
HWBC notes a strong Brexit-related occupier demand pipeline from London, however no new institutions are mentioned in the mix. HWBC believe Dublin is well positioned in terms of office capacity to absorb Brexit relocations, with 401,000 sq.m of space under construction in the city centre.
However, 35% of this space is already pre-let, with completions ranging from mid-2017 to early 2019. In 2016, 76,000 sq.m of space was delivered to the market and 90% of this was pre-let before completion.
A similar trend is emerging already for 2017, with 55% of new space expected to complete this year already pre-let. Residential supply issues are amongst the primary risks to Dublin’s role in a post-Brexit world, although this is now being slowly remedied.
The experts believe the strong level of pre-letting for under construction office space is further evidence of the buoyancy of the Dublin market and this is all before any Brexit uptake of scale emerges.
Over half of the new space expected to complete in 2017 is now pre-let. This will support further pressure on headline rents and narrow tenant incentives such as rent frees (currently one month per year of lease) and break options (rare on leases less than 10 years).
According to Goodbody Stockbrokers, The continued strong occupier demand supports the Goodbody view of central Dublin offices achieving rental growth of 8% in 2017. This has obvious benefits for both Hibernia REIT and Green REIT, both of whom are progressing significant city centre developments in 2017."