Tuesday 26 September 2017

Demand for offices is rising, due to more self-employed

Merrion Square in Dublin is among the areas popular for office space, with one building let under 11 short-term licences with an annual rent roll of €210,555
Merrion Square in Dublin is among the areas popular for office space, with one building let under 11 short-term licences with an annual rent roll of €210,555

Donal Buckley

WITH the numbers of self-employed people increasing at a faster rate than the number of people getting jobs, it's not surprising that demand for small offices, virtual offices and serviced offices also appears to be on the increase.

According to the latest CSO figures, the numbers of self-employed people increased by 33,400 or 11.5pc to 324,500 in the last quarter of 2013.

Over the same period, the numbers being hired for jobs increased by less than 29,000 or less than 2pc.

A number of those self-employed are opting for serviced offices, because they offer greater flexibility in terms of leases, space options, in some cases networking opportunities with complementary businesses as well as secretarial back-up.

For instance serviced offices can save the time and effort involved in hiring a secretary and the obligations of employment law.

Savings can also be made on the up-front capital or leasing costs, as well as the time involved in sourcing equipment and furniture.

Increasingly, those self-employed in search of top-class offices in Dublin city centre have to compete with overseas companies who may be establishing a bridgehead here before setting up a larger operation, or who may be dipping their toes in the Irish market.

Brian Gaffney of Bespoke serviced offices, which specialises in finding suitable serviced offices for clients, says he has noticed an increase of about 10 to 15pc in the level of enquiries since he joined the firm last September.

"As well as overseas companies there has also been increased demand from consultancy firms in the human resources, IT and marketing sectors," he adds.

The strength of demand is also reflected in the recent move by serviced office specialist Regus, to take a lease on 1,200 sq m of space at The Chase office building in Sandyford Business District, Dublin 18. This will bring to five Regus' Dublin locations, but its first serviced office in the southside suburbs.

Dublin's central business district accounts for three of its locations and it also has serviced offices in Dublin Airport and in City Gate in the Mahon suburbs of Cork City.

Meanwhile, two Dublin Georgian buildings, with serviced offices which are almost fully let, are believed to have recently gone sale agreed for over their guide prices. One of these, 12 Merrion Square, a four-storey over basement building extending to almost 670 sqm, is let under 11 short-term licences with an annual rent roll of €210,555. CBRE were quoting €1.95m for the property which also comes with nine parking spaces.

The other building, 20 Molesworth Street, between Leinster House and Dawson Street, also comprises a four-storey over basement building extending to 433 sqm. Its leases are divided between 10 self-serviced offices on short-term licences as well as the Gorry art gallery which has 14 years to run on its lease.

This property currently produces a gross annual income of €82,392 per annum. CBRE quoted €975,000 for it.

Brian Gaffney says there is a broad range of serviced office providers ranging from small investors with fairly basic facilities up to one centre which offers a serviced office overlooking St Stephen's Green for as much as €5,000 per month.

Across the board, he estimates that Dublin rents have increased by about 10pc since last September.

That is not surprising, considering that prime Dublin unserviced office rents rose by more than 25pc last year, albeit they are at the top end of the market.

CBRE are forecasting that prime rents will rise by a further 15pc this year to around €40 per sq ft per annum.

For those Dublin start-up companies which don't require prestigious addresses, the average rent ranges from between €200 and €300 per desk space per month. These usually come in offices of two, four, six or eight desk spaces.

On the other hand some tenants who like their own space may allocate only one person per small office.

The cheapest Dublin suburban space ranges between €130 and €150 per desk space per month.

The monthly rent is usually for 12-month leases, which offers greater flexibility than that offered by unserviced offices and in some cases the serviced office may even facilitate shorter terms of three or six months.

"It can prove more difficult to get serviced offices for more than 10 people and such firms usually find that renting unserviced space can prove more economical," Gaffney adds.

Some of the larger service office providers will offer a full service but will charge extra for each aspect of the service. For instance, they may offer extras such as receptionist answering their phones, to broadband WiFi, boardroom-style meeting space and photocopying service.

Start -up tenants may prefer semi-serviced offices where they answer their own phones, do their own photocopying etc. "Start-ups find semi-service more easy to budget for because the rents are all inclusive and thus they can plan in advance for their overheads," Gaffney explains.

In addition to the upmarket modern offices and Georgian-style smaller offices, some start-ups can also avail of space in local enterprise centres in both the capital and the regions.

According to Enterprise Ireland, the state agency which fosters indigenous enterprise, there are as many as 117 community enterprise centres.

These control a combined two million sq ft of business space, some of which is devoted to both offices and manufacturing activities.

With average occupancy as high as 74pc these centres accommodate 1,133 companies which employ 5,178 people.

One of the largest of the Dublin centres is the Docklands Innovation Park on East Wall Road with 140,000 sq ft of space accommodating 37 firms, employing 346 people.

It has an 85pc occupancy rate. Perhaps the best known is the Digital Hub in the Liberties, Dublin 8, which has close to full occupancy. For its commercial units, rents start from €15 per sq ft, excluding service charges.

But rents in the centres can be keener according to the nature of the enterprise and the support for which it qualifies.

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