New Dublin offices for 100,000 additional workers by 2021
More than 130 new office buildings with a combined floor area of over 12m sq ft and with the capacity to accommodate over 100,000 office workers are being planned for Dublin over the next five years, according to a new report by property consultants, Savills Ireland.
While the Savills 'Skyline Survey' acknowledges that not every one of the 136 developments will proceed, it concludes that the delivery of even half of the projects being proposed currently would be sufficient to cope with the potential demand arising from UK companies seeking to relocate their operations to Dublin in the wake of Brexit.
The report, which is due for publication today, notes that 39 new office developments are currently under construction in Dublin, 13 of which have pre-commitment from a tenant to take space. A further 62 developments have received planning approval but are not yet on site, while 35 are in the planning stages.
The majority of these projects (34) are taking place in Dublin's central business district (CBD) of Dublin 1, 2 and 4. Most of this development is accounted for by new builds, with refurbishments and extensions making up over 18pc of the pipeline. The replacement of existing buildings is set to account for an additional 39pc.
Just under 42pc of the space being delivered within the CBD has already been pre-committed to an occupier and Savills say they expect this figure to rise further. One location undergoing concentrated office development at present is Molesworth St in Dublin's historic inner core, where four office developments totalling 253,000 sq ft, are set to transform the streetscape by the time they are complete next year.
Commenting on the dramatic resurgence of office development within Dublin's CBD, Savills director of offices Andrew Cunningham said: "Between 2010 and 2014, office construction in Dublin came to a complete halt for the first time since records began - something that was almost unique to the Dublin market and not experienced in any other western capital city.
"Take-up, however, has been strong, particularly over the past two years and, as a result, the vacancy rate has tightened quickly, causing rents to rise sharply, making office development viable again."
Cunningham said while the current number of office developments looks "quite high", the reality is that the pipeline of supply is being constrained by available equity and debt funding, notwithstanding the ongoing demand/supply imbalance.
"We are observing large-scale postponement of schemes, especially those in need of pre-lets to commence on-site. As a result, there is little chance of us reaching a point of oversupply any time soon," he said.
The Savills 'Skyline Survey' notes that lack of speculative funding is a recurring issue in the market, with the majority of development in the short-term being undertaken by REITs, funds or private equity-backed by pre-funding.
NAMA is also playing a major role at present, providing full funding for 9pc of all schemes and another 5pc via joint ventures.