COMMERCIAL rents at the prime end of the market increased by 11.8 per cent last year, according to the latest rental statistics compiled by Lisney an4 UCD.

The returns, which are based on the weighted average of the four property sectors, are all the more impressive because they follow two years of steady growth.

The rental growth compares well with last year's consumer price index of 1.6 per cent but it is still lower than the increases recorded in 1987 and 1990.

Lisney is anticipating another year of rental growth in all sectors but is not giving a precise forecast at this stage.

On the broader issue of inflation, it says that while there is a likelihood of some inflationary pressure, it is still expected to remain below 2.5 per cent.

"The only clouds are caused by fears of Monetary Union but there are signals that the effects of this may be positive rather than negative."

Reviewing the different property sectors, the agency says prime retail rents continued to improve during 1996, rising by 8.8 per cent.

The report says the opening of the Blanchardstown Town Centre and the Jervis Centre did not have any adverse affect on either Grafton Street or Henry Street.

Trade on Henry Street and Mary Street had picked up and the better volume of business had continued since the year end.

Lisney contends that the premiums established on Grafton Street have now spread to Henry Street "which now continues its renaissance".

That view is not shared by at least one other main retail agent who contends that the opening of the Jervis Centre has taken some of the heat out of Henry Street.

The Lisney report says modern office rents increased by 12.5 per cent last year. Even more spectacularly, the Georgian office sector, long in the doldrums, has re-emerged with an impressive increase of 18.75 per cent in rent levels.

With modern office rents continuing to improve and vacancy rates running at only 4 per cent of stock, smaller space occupiers have been tempted back to the Georgian market and the cheaper terms available.

Lisney says the demand for industrial space continues to come from investors and owner occupiers alike. However, there has been no consistent evidence of higher rents but letting activity and the market generally are expected to improve during the remainder of the year.