Prime commercial property rents in Dublin will rise by more than 4 per cent in 2017, according to research by Cushman & Wakefield, the commercial partner of the Sherry FitzGerald group in Ireland.
The report predicts that rents will rise to €646 per square metre this year, up from €619 per square metre at the end of last year.
Rents rose by 4.6 per cent in 2016, the company said.
Cushman & Wakefield said this year should be “very promising” for the Irish market. Total investment transactions are forecast to be in the region of €3 billion, with a strong volume of re-trades from early entrants into the market post the economic crash.
It said the positive outlook for economic and employment growth bodes well for occupier demand in the office market, most notably in Dublin but also in regional centres around the country.
Total turnover in the Irish investment market in 2016 rose by 21 per cent year-on-year to €4.46 billion, significantly above the long-run annual average of €1 billion.
Brexit
Activity levels in the first half of the year were strong but dampened in the third quarter amid fears of the impact of Brexit on the Irish economy. Some €1.3 billion worth of transactions were completed in the final quarter of the year as Brexit fears eased.
Last year saw considerable activity in the retail investment market, which represented €2.26 billion or 51 per cent of total investment spend during the period.
The largest transaction was the sale of the Blanchardstown Town Centre, which was acquired by Blackstone for €950 million. This was the largest single asset sale in the history of the state.
Cushman & Wakefield said strong employment growth and continued foreign direct investment resulted in more than 260,000sq m of accommodation being taken up in the Dublin office market last year.
This was 16 per cent higher than in 2015 and 45 per cent ahead of the 10-year average.
‘Resilient year’
Marian Finnegan, chief economist with Cushman & Wakefield, said 2016 was a “resilient year” for the Irish commercial property market. “Overall volumes were incredibly strong with €3 billion invested directly by US and European investors,” she said.
“It was also a significant year for the Dublin office market, both in terms of occupation levels and in terms of development. Just over 31,000sq m of office accommodation was delivered in Dublin during the year, which was the first wave of development in the city since 2011.
“Notably, there is an additional 373,000sq m of office space under construction in Dublin today, of which 230,000sq m is expected to be completed by end 2017. This is critically important to satisfy demand pressure and stabilise rental growth.”
