Office rents for prime locations in Dublin are on track to hit levels last seen just before the financial crisis in 2008.

A market review for the first six months of the year published by consultants HWBC finds take-up of new office space was up by 56% compared to the same period last year. 

Strong demand is coming from the financial services centre in particular, driven by a desire by UK based institutions to set up offices in other EU member states post Brexit.

HWBC noted that at least 15 global financial institutions have announced their intention to set up or extend their operations in Ireland this year. 

Significant deals in the first half of the year include Barclays signing up as tenants at Green REIT's One Molesworth St and JP Morgan's decision to expand at Kennedy Wilson's Capital Docks. 

They join financial groups including Citi, Aviva, and Bank of America who have indicated plans to expand operations in Ireland.

Today's review showed that Grade A city centre office rents were up 8% to €62 per square foot. 

HWBC said it expects city centre rates will peak next year at €65 per sq ft.

Meanwhile, rental growth was a more modest 2% to €28.50 per sq ft in surburban areas.

HWBC said the recovery in suburban rents is at an earlier stage in the cycle, and while Dublin city centre rates will peak next year, suburban rents will continue to grow into 2019.

Tony Waters, Managing Director of HWBC, said that given the large volume of new space coming to market, and with almost 4 million sq. ft. of space under construction, it is no surprise that rental growth will likely reach its peak next year. 

"That shouldn't be a cause of concern for investors and landlords given there remains strong tenant demand, with 90% of space new space being let on completion," Mr Waters said. 

"The economy and employment levels are still growing, which is the principal driver of office demand, with the likely kicker of further Brexit related demand to come," he added.

But Mr Waters said the one major concern for both Brexit and FDI investors in Ireland is the low supply of affordable and suitable residential accommodation.

He warned that this issue may well cost us investment decisions to competitors like Frankfurt, Paris and Amsterdam in the short term. 

"The tough political decisions needed to unlock increased supply have not yet been taken, and even when they are it will take two to three years to have a major impact," he cautioned.