The Dublin office market is now on course to be the best performing sector of the Irish property market in 2007, the commercial real estate analyst predicts.

The overall vacancy rate in the Dublin office market at the end of the second quarter stands at 10.3%.

Despite the strength of letting activity in the market, older office buildings continue to be vacated and new buildings are completed on an ongoing basis with the result that the vacancy rate, although declining, is declining slowly.

"We are witnessing a cyclical uplift in rents in the Dublin office market, " the CBRE report states. This momentum is most evident in the prime Central Business District (CBD) where the availability of new accommodation is continuing to tighten. The vacancy rate in Dublin 2/4 is now 4.2%. Unlike London, where the pace of rental appreciation is likely to decline over the coming years in response to a surge in new supply, the development response in Dublin appears to be very controlled, which should sustain stable rental growth momentum in this market for the next three to four year period at least.

There is unprecedented demand for office redevelopment opportunities in the Dublin market at present. This is most pronounced in the CBD and in Dublin Docklands. A lack of office investment product being offered for sale will however result in a year-on-year decline in investment turnover in 2007.