Jobs growth at risk as firms face year-long wait for Irish offices
Published 24/09/2015 | 02:30
Multinationals looking to expand their operations here are being warned they'll have to wait for a year because of a shortage of office space.
Around 70pc of the take-up of office space in the first half of the year was dominated by international technology firms, according to joint research from the Economic and Social Research Institute (ESRI) and commercial property giants Jones Lang Lasalle.
And they're warning that available office space in Dublin city centre is limited.
"We have seen a number of FDI companies move to Ireland that have expanded rapidly and grown, for example Facebook and Google," said Hannah Dwyer, head of research at JLL, and joint author of the report.
"Occupiers require availability of space and flexibility in leases to enable them to expand quickly.
"With city centre vacancy at just 5pc and the first buildings due for completion already committed, the reality for expanding occupiers is that they will have to wait 12 months for available space.
"It is imperative that the future growth of companies ... is not constrained by the availability of commercial property."
The research note examines the take up of space in the Dublin office market by multinational companies. It shows how this has evolved and whether there is enough pipeline stock to meet their growth requirements.
David Duffy, ESRI research officer and co-author, said office space is an important factor for many businesses. "Our analysis shows that initial FDI requirements for office space are usually small scale but expansion into larger office space can occur in a relatively short time period," Mr Duffy said. "As a consequence of the crash there was no office space construction in Dublin between 2011 and 2013, which has caused a reduction in the choice of available properties."
A shortage of office space is also pushing up rents. According to CBRE's second quarter review of the commercial property market in Europe, Dublin office rents rose 5pc during the period.
That put it alongside Barcelona as one of the fastest climbers during Q2. Rents in central Dublin have almost doubled in the last two years, as a dearth of high quality office space in the central business district pushed up rates.
American Chamber of Commerce chief Mark Redmond said demand for grade A office space in Dublin has grown to unprecedented levels.
"The ability to meet the demand for good quality office and residential space is key to any country that is out there actively competing for FDI."