Office deals were already "falling out of bed" in the first three quarters of this year, says Declan O'Reilly of DTZ Sherry FitzGerald, but September 11th propelled companies to postpone expansion plans in an uncertain climate.
Disaster in the US was undoubtedly a catalyst, agrees John McKay of Jones Lang LaSalle, but the switchover in the space of a year from a landlord's to a tenant's office market had already been in evidence for quite some time.
"Twelve to 15 months ago it was a landlord's market and you wouldn't have got the same break options and lease terms. The suburban market suffered quite badly with a drop off in demand early in the year," says McKay. Upheavals in the technology sector and the poor performance of the Nasdaq early in the year had already led to a downturn in IT requirements for office space.
The three months up to end of June were the lowest recorded for any quarter since 1993.
In July, Baltimore Technologies offloaded the two office blocks it planned to occupy at Parkgate Street and a British company pulled out of a deal to lease O'Connell Bridge House in the city centre
Post-September 11th, 48 per cent of the 314,607 sq ft let was to financial tenants, according to Insignia Richard Ellis Gunne, and 72 per cent of lettings were in the city centre.
The "wait-and-see" approach of many organisations has meant that the take-up of office space this year was down an estimated 20 per cent to 1.9 million sq ft on last year, according to Lisney with vacancy rates up from 5.85 per cent to 10 per cent; Insignia Richard Ellis Gunne give a slightly lower figure of 1.6 to 1.7 million sq ft take up with a 6 per cent vacancy rise.
These figures are more representative of the suburban market - the city centre has maintained a steady performance with vacancy rates of just 6 per cent, with terms agreed on one-third.
The people normally taking up space at Park West, Blanchardstown and Citywest - high tech software and telecommunications companies - are no longer actively seeking office accommodation.
And this is in a year when a vast square footage of space was unleashed on to the market in developments like Woods House in Blackrock Village, the third block of Cherrywood Science and Technology Park, the John Rocha-designed Beacon Court in Sandyford and the Apex Business Centre, also in Sandyford.
Despite big signings like Eircell. which took a massive 264,000 sq ft and First Active, which leased over 72,000 sq ft, Central Park in Leopardstown, still has 152,000 sq ft vacant.
Insignia Richard Ellis Gunne says that suburban office rents have softened from £19-£20 (€24-€25) per sq ft to around £15-£16 (€19-€20), while city centre rents have dropped only marginally from £40 (€50.79) per sq ft to £37-£39 (€47-€49) per sq ft. Some west Dublin developments have dipped as low as £14 per sq ft to lure tenants.
Landlords who offered break clauses after 15 years on 25-year leases are now in many cases willing to bring options forward to seven to 10 years with rent free periods of up to eight months.
"Tenants are now looking at far better incentives on top of fit-out, rent free periods, break clauses and concessions which are hard to evaluate because they are often under the table," says Marie Hunt.
"Thankfully, the financial services, the state sector and pharmaceutical companies are still active," says James Nugent of Lisney. The Office of Public Works (OPW) is a big player in the market. Lisney calculates that the OPW took more than 200,000 sq ft of office buildings with a further 142,000 sq ft under negotiation - which represents 10 per cent of the year's total transactions.
The survival of the suburban office park comes down to location, facilities like restaurants, bars, gyms, creches and a good public transport network.
Those parks "with poorer quality buildings are suffering as companies are increasingly cautious when making a commitment to a location. The specification of the building is important and it will be taken into account whether the building will need upgrading in a couple of years time," says Nugent.
"Most of these developments have few car-parking facilities, says Marie Hunt. "It could be the most fantastic building, but if there's no public transport to and from it, it will be hitting a brick wall."
James Nugent predicts that the first quarter of next year will be "tough enough. There is a perception out there that tenants should sit and wait for a better deal but the reality is probably quite different.
"Those who are active in the early part of next year will probably do better because vacancy rates will probably go down as supply diminishes. Developers are not commencing speculative projects except in a limited way in the city centre."
Supply has also been curtailed by more cautious lending by the banks. Marie Hunt says her best estimate for an upturn in the commercial property market is "the mid end of next year."
"Many US companies have not cancelled plans for expansion, they've put them on hold and are waiting for the go-ahead from their treasury departments."
Next year might not be as bad as people think, says Declan O'Reilly. "I'm not quite sure anybody knows how things will turn out next year but there's a feeling out there that at the back end of next year there will be an improvement."
