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office via Shutterstock
New Gaff

Lack of office space a real headache for companies looking to set up shop

And for the office space already there, the price is going keep going up and up.

CONCERNS HAVE BEEN raised that companies looking to set-up shop in Ireland will abandon their plans if office space isn’t readily available.

A new report from the Society of Chartered Surveyors Ireland (SCSI) makes stark predictions for rising office rents in Dublin, largely due to a lack of supply.

The report’s authors are calling on the Government to take steps to allow “measured speculative development” to take place, as it can take as long as three years for new buildings to become available.

The Commercial Property Review and Outlook 2015 details a 29% year-on-year increase in prime office rents in Dublin last year.

This is among the highest in the world. A recent CBRE report put this figure at 34.9%, the largest in the world and almost 15% above the next largest increase.

Next year, rents are predicted to rise by 12% in the capital, 9% in Connacht and Ulster, and 5% in Munster and Leinster, according to the SCSI.

Chairman Eamon Maguire said:

“The increase in rents has been largely due to a lack of supply combined with higher levels of demand from domestic and international companies seeking new office space or to expand existing operations as we have seen several of the large Technology, Media and Telecommunications companies do in 2014.

Ensuring the availability of development finance for measured speculative development is key and will address the supply issue while also supporting job creation.

“But we have some concerns that companies won’t want to wait around for 18-36 month completion time-frames and that is why it is imperative the Government addresses this issue immediately.”

Other figures in the report include:

  • Prime retail rents are expected to increase by 10% in Dublin, 9% in Connacht and Ulster, and 5.5% in Munster and Leinster.
  • Development land values increased by 32% in Dublin, 42$ in Munster and Leinster, and 4% in Connacht and Ulster.
  • Investment in the commercial property market accelerated to around €4.5bn in 2014, up from €2.6bn in 2013

Read: Revenue apologises to 5,000 pensioners after tax blunder >

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