The Dublin office market remains challenging but, unlike other market sectors, we have managed to get a reasonable level of leasing activity going again. In the three months to the end of June, 23,242 square metres of office lettings were signed – a significant improvement on the 10,000 square metres signed in the first quarter. Our estimate for annual take-up in 2009 has been revised upwards from 45,000 square metres to 60,000 square metres and this is definitely good news. However, 78,000 square metres of new office development are scheduled for completion by the end of 2009 and the vacancy rate, which currently stands at just under 21%, will inevitably increase further. So some sort of fight back has started but we have a long way to go.

The highlights of the second-quarter take-up were lettings to international companies such as Facebook (1,050 square metres at Hanover Reach) and Amazon (1,300 square metres at Kilmainham Square). In my view these international tenants are our only way forward and it is hoped that past growth enjoyed by companies such as Google and Microsoft will be mirrored by new market entrants.

Ireland ticks the boxes for many tenants as an international headquarters location. In addition to our well-known tax advantages, we now have a large, educated labour pool, available office space at very competitive prices, and improving infrastructure. This story needs to be told to the international business community through every available platform.

My experience of previous downturns is that new buildings consistently have the best chance of getting let. There is now fantastic value on new buildings in Dublin city centre, Sandyford and Cherrywood. Developers, often with the support of their banks, have binned their cash flow and projections and are now chasing the deals. There is a huge supply of tired, second-hand stock that realistically could remain vacant for three to five years.

Landlords too often feel that reducing the quoted rents will secure tenants and this is why they are often losing out. Every tenant enquiry needs to be approached on an individual basis and often face-to-face meetings can reveal more than what is on the request for proposals form.

I am constantly asked what the current prime office rent level is. We all accept that it has fallen by over the past 12 months but by how much? The market is full of contradictions. Take two available buildings on, say, St Stephen's Green: one landlord is desperate for cash so has dropped his headline rent from €60 to €30 per square foot to try to achieve a quick deal. The neighbouring landlord has dropped to €50 per square foot but will dress the deal up with a long rent-free period to protect the capital value of his building.

Should the desperate cash flow needs of a few developers rule the market or is a more balanced view required? My own view is that Dublin prime office rent should be quoted at €430 per square metre, and tenants are fully aware of what kind of deals can be negotiated around this.

Realistically, there will be no speculative development for at least two to four years. However, developers with key dockland sites or with sites close to important future transport nodes will receive occasional design and build enquiries. In previous downturns, site owners also formed partnerships with established contractors and were able to approach deals in a less conventional way, and often this co-operation led to deals being done. I hope the Nama framework will allow this type of thinking outside the box to succeed.

A matter of concern in the Dublin office market is the government's proposal to ban upward-only rent reviews. The proposed legislation could have serious implications for leasing arrangements. While the motives behind it may be well-intentioned, it is our belief that such intervention is unnecessary as the market is already regulating itself. There is clear evidence that landlords have been engaging with tenants to come up with temporary solutions to work through their difficulties. Additionally there would be no retrospective provision in the legislation, so there would be no relief for current tenants.

Not only could the proposal have a negative impact on demand, but the change to Ireland's lease structures would lead to increased legal arbitration between tenants and landlords. The ban would therefore have a net negative impact on the Dublin office market while providing no aid to those now in difficulty.

So, in summary, there are some small grounds for optimism but many difficult years lie ahead. Future tenant demand depends on the recovery in the US, and the sooner that happens the better. Indigenous Irish companies, such as the banks, which had large potential requirements, do want to upgrade their accommodation but may wait another 12 to 18 months until they have a better picture of the overall economic outlook.

Rental levels will continue to fall unless Nama gives many troubled developers some protection. An annual take up of 65,000 square metres will see many well-located new buildings achieve some lettings but the prospects for secondary space are frankly very poor. If you have a building where the tenant has a break option, my advice is to cut a deal and hold onto them.

Willie Dowling is head of office agency and business generation at CBRE