THERE’S ENOUGH OFFICE space under construction in Dublin at the moment to accommodate 30,000 workers a new report shows.
The research, carried out by property consultants Savills, details 35 separate building projects under way in the capital at present.
All told that adds up to 3.5 million square feet of space.
The vast majority of the buildings in question are to be found in Dublins 1, 2, and 4, with about a third of that space already committed to future renters.
Significant developments currently under way include Vertium, a 172,000 sq ft office building on the south side’s Burlington Road – which is due for completion in April 2017.
Closer to the city centre in Dublin 2, numbers 32 and 40 Molesworth Street are two of four new developments currently under construction on the street with the first of these due for completion next October, while next door on St Stephen’s Green Irish Life is expected to commence construction on a new building before the end of the year.
Two more prime buildings are due to being construction imminently in the South Docklands for completion in late 2017 or early 2018.
The data somewhat gives the lie to the idea that there’s no construction going on in Dublin at present. However according to Andrew Cunningham of Savills Ireland the supply shortage in the city is likely to continue due to “the time lag between construction and completion”.
Which means rents are going to keep going up.
“In an ideal world, the delivery of office space would be instantaneous. In reality, it takes time. The average lag time between planning, construction and completion is 2-3 years,” says Cunningham.
In the interim, it stands to reason that rents will continue to rise.
Currently prime office space is being let for €55 per square foot in Dublin. Savills expect this to rise to €65 by the end of 2016.
Rising rents are one of the biggest problems for corporate entities across the city. Savills aren’t expecting that situation to change anytime soon despite the glut of construction already under way.
“Construction finance which was freely available for a long period during the last cycle is much more difficult to obtain now,” says Cunningham.
This has led to a slower pick up in development and generally only the most professional developers are obtaining it.
One significant problem regarding the current glut of building is that many of the projects under way are redevelopments, not new developments. These are seeing office space being taken out of the supply chain.
“We are likely to end up with less space rather than more in the short term due to demolition of old 1970s and 1980s buildings which are unwinding from 35 year leases – a new phenomenon in this construction cycle versus the last,” says Cunningham.
It’s going to get worse before it gets better in Dublin it seems.