The shortage of office space in Dublin is expected to worsen in the coming months as several major companies compete for a small number of new developments which are nearing completion.
The acute scarcity comes after 1998 saw the highest-ever level of lettings. The take-up during last year exceeded 2,440,000 sq ft - 53 per cent more than in 1997.
The overall vacancy rate in Dublin of 2.4 per cent is now the lowest for more than 30 years, according to a new study by Hamilton Osborne King and TCD's Centre for Urban and Regional Studies.
The exceptional level of demand for offices mirrors the buoyant economy. End-user demand has never been stronger as the boom continues and overseas and indigenous companies snap up office, industrial and retail space.
Unlike previous property booms, there has been no rush to build speculative office blocks. This measured approach and the tendency to pre-let buildings before starting construction work suggests that the lending institutions are determined not to repeat some past mistakes.
While an additional 2.3 million sq ft of new space is due to be completed this year, HOK estimates that almost half of it has already been committed to tenants. A large proportion of the balance is likely to be taken up in the coming months. The fact that only 12 per cent of the space to be provided this year will be in Dublin 2 - the traditional office area - underlines the immense shortage.
The only large new office scheme nearing completion in the city which has not yet been committed is Hardwicke's 85,000 sq ft development at Hatch Street. However, with several high-profile companies currently looking at the scheme, it is not likely to be available for long.
This year will see a major switch to out-of-town locations for the new generation of office blocks. HOK calculates that 44 per cent of the space to be developed this year will be in "non-traditional office locations". Much of this will be in Sandyford, while three west Dublin sites will also be used - Citywest, Parkwest and Blanchardstown.
Dunloe Ewart is also due to unveil its plans shortly for Cherrywood, one of the best sites in south Dublin, where a science park is to be developed alongside a business park.
The report says the location attraction of enterprise areas and sites in the vicinity of the M50 ring-road will " continue to effect a decentralisation of office activities from the core".
The growing number of developments in these areas will help to limit the pressure for higher rents in the traditional office core. However, the changing nature of office developments has major implications for future patterns of commuting, heralding the establishment of trends reminiscent of inter-suburban travel in North America.
Roland O'Connell of HOK forecasts an upward pressure on rents throughout this year, particularly for prime locations in the city, where rents of between £25 and £27 per sq ft are likely to be achieved.
At present there is around 393,000 sq ft of vacant office space in Dublin, but only 150,000 sq ft of it is located in Dublin 2.
