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Michelle O'Riordan
Office space

Think Dublin is an expensive place to set up shop? It's going to get much worse

Office rents could be back at pre-crash prices within three years.

DUBLIN OFFICE RENTS could soon be back to the boom-time levels which put the city in the top ten most expensive places to set up a business.

Davy Research analysts said they expected the combination of “deep demand and limited supply” would keep pushing up rents until at least the end of 2017 and the going rate for prime space in the capital would hit its pre-recession peak again during that time.

But they issued a word of caution that the volatile Irish property market and more building could mean another “rental correction” further down the track.

In its latest bulletin on the Irish commercial property scene, Davy said Dublin office rents were up 28% in the last 12 months to an average going rate of €484 a square metre.

Prices had crashed to about half their property-bubble peaks during the recession.

During the boom in 2007, prime office space in the capital was going for roughly the same price as similar digs in Hong Kong or midtown New York and cost more than either Zurich or Frankfurt.

PA-15233605 Dublin office rents were on par with midtown New York prices at the peak of the boom Paul Seheult / Eye Ubiquitous/Press Association Images Paul Seheult / Eye Ubiquitous/Press Association Images / Eye Ubiquitous/Press Association Images

Nama will help break records

Davy said 2014 was on track to break commercial property spending records as agents forecast investment to hit €4 billion this year.

Bad bank Nama has been speeding up sales from its one-time €74 billion portfolio and recently put another big batch of commercial properties, including the building where Facebook recently set up its European headquarters, under the hammer.

Davy2 Davy Research Davy Research

The Royal Bank of Scotland-owned Ulster Bank has also been gearing up for big property sales as it starts offloading its €1.7 billion Irish loan book.

Davy said vacancy rates for top-shelf Dublin office space were sitting at below 2% and that driving prices up across the board.

READ: Nosebleed office rents could force companies to ‘fringe’ of Dublin city centre >

READ: Dublin office rent has grown by nearly 25% in a year >

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