OfficeMarket:A new survey says rising energy costs mean older and less efficient office blocks are getting a lot more expensive to service.
Service charges for office buildings in Dublin went up by 7.7 per cent to an average of €68.48 per sq m (€6.36 per sq ft) in 2007, according to a Jones Lang LaSalle survey.
The main reason for the rise was the increases in the costs of power, lighting, heating and air conditioning.
The average service charge in buildings with air conditioning was €76.26 per sq m (€7.08 per sq ft) in 2007, 11 per cent higher than the overall average and up 9.1 per cent on 2006, mainly because of increases in energy costs.
Offices without air conditioning saw service charges rise by 3.5 per cent on the year, in line with inflation.
"Overall, the survey found that offices which were built between 1980 and 1990 with air conditioning have the highest service charges, averaging €95.01 per sq m," says Dr Clare Eriksson of Jones Lang LaSalle's research department "Offices built between 2001 and 2006 without air conditioning had the lowest service charge levels at €53.10 per sq m."
Michael Miland, director of Property Management at Jones Lang LaSalle, says: "Total outgoings are now one of the main considerations of the modern office occupier when choosing which properties to locate to, or whether to continue to stay on or exercise break options in their current buildings."
Rent, insurance and increasingly more often, levels of service charge are seen as drivers of competitiveness of office buildings, he added. "With regulatory controls on the ownership and management of properties, such as energy efficiency ratings, asbestos control, etc, now on the increase, the savvy landlord who is management-conscious will begin to reap the rewards in coming years by attracting and retaining the best tenants."
The main components of the average service charge are cleaning (including water charges) and power and light at €11.48 and €10.60 per sq m (€1.06 and €0.98 per sq ft) respectively. Other major costs include security (€10.24 per sq m/€0.95 per sq ft) and heating and air conditioning (€10.09 per sq m/€0.94 per sq ft).
The most expensive components for buildings with air conditioning are power and light costs (€15.83 per sq m/€1.47 per sq ft), heating and air conditioning (€13.38 per sq m/€1.24 per sq ft) and cleaning costs (€11.91 per sq m/€1.10 per sq ft).
Security costs have risen over the last two years due to Joint Labour Committee (JLC) regulations which gave security staff out-of-hours and unsocial hours payments along with Sunday shift premia. Under the JLC agreement costs were set to rise further from January 1st, 2008.
Buildings in the suburbs were found to have slightly lower service charges than buildings in the city centre, primarily because they generally have lower specifications and require less security than the city centre.
Irish office buildings still offer good value compared to similar buildings in the UK. Average office service charges in the UK are €86.94 per sq m (€8.08 per sq ft) which means that the average service charge for Dublin of €68.48 per sq m (€6.36 per sq ft) is approximately 21 per cent less than in the UK. Costs in Dublin are lower than in the UK for cleaning, security, maintenance, heating, air conditioning, power and light.
