Strong jobs growth underpins Dublin office sector, says Savills Ireland

Dublin

According to the latest data from property advisor, Savills Ireland, the total take-up of Dublin office space in Q1 was over 100,000 sq ft, which is low by historic standards but not altogether surprising given the Covid-19 restrictions in place. A total of 15 individual transactions were completed during the quarter.

Most of the activity took place in the city centre, although a small number of deals did occur in the suburbs. This pattern somewhat goes against the narrative of a possible shift away from the Central Business District (CBD) towards suburban offices, but Savills expects decisions on future real estate strategy and dispersal to follow re-openings of main offices as a priority.
 
Office-based employment in the ICT sector rose by 9.2 per cent year-on-year, and the FIRE (finance, insurance, and real estate) sector experienced similar robust growth (+8.2 per cent year-on-year) despite the headwinds faced in 2020. This stands in stark contrast to the year-on-year decline in other non-office related sectors such as Accommodation and Food Services (down 25.7 per cent year-on-year).
 
Recent announcements are also very encouraging. For example, US software firm Workday recently announced 400 new jobs at its European headquarters in Smithfield in Dublin and Irish software company Enterpryze will create 100 new jobs for its headquarters in Cherrywood, Co Dublin. Stripe, the online payments firm, plans to create at least 1,000 new jobs here over the next five years and these will be concentrated in the firm’s Dublin office.
 
Chinese tech giant Huawei said it plans to invest EUR80 million into Irish R&D over the next two years, leading to the creation of 110 new jobs, mostly in Dublin. Personio, a German HR tech company, is looking to fill 140 jobs in Dublin by the end of the year and last month Microsoft Ireland announced 200 jobs at its EMEA digital sales centre in Dublin. Outside the capital, Apple in Cork and Diligent, whose European hub is in Galway, are also growing their workforces.
 
Savills says firms are actively looking for space and it seems that astute occupiers are examining the market because now is the time where landlords will be more flexible.
 
TikTok, the Chinese-headquartered social-media company, is actively seeking space in Dublin to accommodate up to 2,000 workers onsite immediately, according to media reports. It seems that three locations are under consideration: The Sorting Office in the south docklands, the North Dock development in the north docklands and Charlemont Square in the city centre.
 
Andrew Cunningham, Director and Head of Offices at Savills Ireland, says: “Covid-19 restrictions on commercial construction will lead to less new stock being added to Dublin’s inventory than would otherwise have been the case, giving further support to rent levels given much on-site stock is pre-let. Reserved tallies appear to be heading back up where they stood at the end of Q1 2020, and active demand tallies appear to have bottomed out and are now turning. Our agency team therefore expects increased levels of lease execution to follow as headway is made on vaccinations.”