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Natural Vacancy Rate in Dublin Office Market Higher Than Previously Thought

November 10, 2010

Analysis of:Predicting Turning Points in the Rent Cycle Using the Natural Vacancy Rate – An Applied Study of the Dublin Office Market | www.ssisi.ie

New research by Dr. John McCartney indicates that the Natural Vacancy Rate for the Dublin office market is almost 15%.   This is in contrast to the long-standing assumption that it was 7%. The implication is that the market is closer to a recovery than previously thought.  However, no increase in Dublin office rents is likely before 2014.

Irish Commercial Real Estate - What is the Natural Vacancy Rate?

November 4, 2009

Analysis of:Dublin Office Report Q3 2009 | edition.pagesuite-professional.co.uk

The 'natural' vacancy rate in Irish commercial property markets may be twice agents' current published estimatesImplies that the turning point in Irish office market could come sooner than expected

Rising Vacancies Undermine Dublin Office Rents - Banks Facing Investor Risk

July 31, 2009

Analysis of:Dublin office vacancy rate could hit 27% | www.propertyweek.com

Dublin office vacancy rate doubled between 2007-present Completion of buildings under construction will further exacerbate oversupply Rents on new Dublin office lettings have fallen by one-third in last 18 months. Further declines forecast until 2011 Survey evidence - rents on existing leases now being undermined by high vacancies, rent reversion and, potentially, new legislation In the coming months, banks will need to be aware of potential default by property investors as well as developers.

Glut of Office Space In Dublin Amplifies Banking Crisis

January 9, 2009

Analysis of:As Vacant Office Space Grows, So Does Lenders’ Crisis | www.nytimes.com

Dublin office building reached a new peak in 2008.  As in previous peaks, this oversupplied the market, and vacancy rates are now rising while rents are falling sharply.  This has put added pressure on developers and investors, and it will cause further distress to funding institutions. In addition, a construction hiatus will inevitably occur over the next two years as demand is left to catch up with supply.  Dublin office completions will fall by 48% in 2009 and a further 14% in 2010.  Given the reliance of Ireland on its construction industry, this will deduct approximately 0.6% from GNP by 2010, not including second round effects.

Over-Supply of Dublin Office Space Spells Bad News for Developers, Investors, Funding Institutions and the Irish Macro-Economy

January 8, 2009

Analysis of:An Empirical Analysis of Development Cycles in the Dublin Office Market 1976-2007 in Quarterly Economic Commentary, Winter 2008. Dublin: ESRI. | www.esri.ie

Office building in Dublin has traditionally been highly cyclical, with supply always overshooting demand at construction peaks This results from developers basing their construction decisions on over-simplistic market signals of rental growth and 'take-up' We are currently at a peak in Dublin office construction.  As is usual at these peaks, the market is oversupplied.  Consequently, vacancy rates are rising and rents are falling sharply This will cause distress for many developers and investors, and will put pressure on funding institutions There will inevitably be a sharp fall in office construction over the next two years as demand will have to be allowed catch up with supply The article's regression model predicts that office construction will fall by 48% in 2009 and by a further 14% in 2010.  All else equal this will deduct 0.5%-0.6% directly from GNP and will lead to the loss of approximately 7,500 construction jobs.

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