Commercial property market recovery spreads beyond Dublin

Many of the larger requirements for space in the Dublin office market have now been satisfied and tenant demand has weakened a little over recent months, according to CBRE’s latest bimonthly review of the commercial property market.

“Several technology companies in particular have leased additional accommodation in anticipation of shortages at this point in the cycle,” according to the review.

“The next wave of take-up in the Dublin office market is most likely to emanate from indigenous occupiers. Indeed, one of the most significant new requirements to materialise in the last few weeks is a requirement from the National Treasury Management Agency [NTMA] for between 6,500sq m and 7,400sq m of accommodation.”

The estate agent also points to “easing supply pressures” due to an increase in the number of companies subletting and assigning surplus office space. It cites the example of Wonga, which is to assign its lease on the Bloodstone Building on Sir John Rogerson’s Quay, which will release 2,445sq m of fitted accommodation to the market in Dublin’s docklands.

High rents, however, mean companies are “increasingly looking beyond Dublin city centre in their search for suitable accommodation”, while there has been a “notable increase” in requirements for provincial offices over recent months.

CBRE puts prime CBD rents in Dublin at about €538 a sq m (€50 a sq ft) as opposed to €269 a sq m (€25 a sq ft) in the south suburbs.

Retail market

The first half of 2015 has been busier than anticipated in the Irish retail market, according to the review. “There is clear evidence that the recovery first experienced in Dublin is beginning to manifest outside of the capital, with healthy levels of demand for good provincial shopping centres and certain provincial high streets now emerging,” CBRE says.

“Demand is also strengthening for accommodation in retail parks around the country, particularly for smaller units of less than 465sq m (5,005sq ft) and for large units extending to more than 1,394sq m (15,004sq ft).

“We expect to see further upward movement in rental values over coming months as retailer demand continues to improve.”

One of the best-performing segments of the retail market has been the food and beverage/restaurant sector with “strong competition prevailing for good opportunities”.

For example, five of the six food outlets in the new extension at Liffey Valley Shopping Centre in west Dublin have been pre-let.

Zone A rents on Grafton Street now stand at €5,500 a sq m and at €3,500 a sq m on Henry Street. Dundrum Town Centre leads the way for shopping centre rents at €4,000 a sq m, while Blanchardstown comes in at €2,500 a sq m and Liffey Valley at €2,250 a sq m.

Meanwhile, prime retail warehousing in Dublin is renting at €296 a sq m and €100 a sq m in the provinces.

CBRE reports “brisk” activity in the development land market over recent months, with 54 site sales completed in the first six months of 2016 for a total of €276 million. This compares with €203 million of transactions in the same period of 2014.

Bumper take-up of more than 86,000sq m in the Dublin industrial market during the first quarter of the year will be matched if not exceeded in the second quarter, according to the review. Meanwhile, a number of notable transactions have been completed in provincial industrial markets recently.

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