Dublin's North Docklands becomes a magnet for tech and co-working
Dublin's North Docklands area is showing increasing appeal to investors and developers thanks in part to competitive office rents and in part to the strong demand for both short and long-term residential accommodation.
The mix of new developments and occupiers in the pipeline also suggests that the area will not alone strengthen its appeal for financial services companies but also for tech companies.
After the collapse of Anglo Irish Bank and the difficulties faced by banks and other financial services companies, the north docklands appeared to lose its attraction in terms of demand from the financial services sector. So far Brexit has done little to reverse this trend. In contrast the tech sector has been much more active.
An analysis of letting deals by David O'Malley of Savills shows the north docklands with 15 lettings in 2016 for 19,849 sq m (213,653 sq ft) of offices. Then in 2017 while the number of lettings increased to 19 the amount of space almost halved to 10,392 sq m (111,858 sq ft). And last year while the number of lettings increased slightly to 20, the amount of space more than doubled to 21,778 sq m (234,416 sq ft).
O'Malley says that the tech sector accounted for as much as half the area's lettings in 2016 and 2017. However tech's share dropped to only 18.5pc in 2018 while the real estate sector, mainly serviced offices, accounted for as much as 42.45pc. The latter sector was boosted by WeWork's letting at No 2 Dublin Landings. However, WeWork's occupants could also include tech businesses.
"I don't see the 2018 reduction in ICT's percentage take-up as a trend. ICT take-up will likely increase in 2019 with one large letting already agreed. There is also likely to be significant interest from this sector as we come closer to the completion of schemes such as Exo and North Dock."
He also believes that more ICT companies would take more space in the north docklands if there were more Grade A offices immediately available. Some of the larger rumoured take-up in the area are ICT firms.
"The Grade A vacancy rate in the North Docklands at the end of Q3 2018 was 5.2pc and this is likely to have reduced significantly taking into account the recent lettings at The Exchange. This is well below the natural level of vacancy," he adds.
Financial services accounted for 15.3pc of 2018 office lettings in the area while professional/technical services accounted for 13.5pc. It will be interesting to see if the increased presence of Government financial services organisations may affect demand from private financial services companies. The Central Bank's completion and occupation of the former Anglo Irish Bank's intended headquarters building has been followed by the National Treasury Management Agency's deal to take space at the neighbouring Dublin Landings scheme.
Meanwhile, the north docklands' reputation as a financial services centre could be further enhanced if, as reported in this newspaper recently, the OPW secures a lettings deal at Dublin Landings for the Irish Revenue Commissioners.
Interestingly the hospitality sector could help to distinguish the north docklands from south docks. Currently the north docklands hotels include the Gibson, Hilton and Spencer. Oakmount, headed by Paddy McKillen Jnr and Matt Ryan, is also developing another hotel, the Mayson, on North Wall Quay.
In addition, the Beckett Locke aparthotel and Michael O'Flynn's Tramyard student hostel are well on their way with the latter already open for business and both of these will cater for summertime visitors.
In contrast, south docks only has The Marker and Maldron hotels, although the south docks area is served by other hotels close by.
The north docklands hotels serve both corporate visitors as well as those attending conferences at the Convention Centre Dublin (CCD) or concerts at 3Arena. The visitor ambience of the area is further enhanced by tourists disembarking from cruise ships and visitors to the Epic Museum at CHQ (Custom House Quay).
Longer term residents of the north docklands will also be catered for by new apartment developments such as the 268 units being built at Dublin Landings and it's a reflection of the strength of demand that developers Ballymore and Oxley are seeking to forward sell the apartments which are believed to be guiding more than €170m.
To the east of this site, Johnny Ronan's Ronan Group Real Estate (RGRE) and partners Colony Capital may build around 500 apartments on the 4.6 acre 'Project Waterfront' site which this newspaper reported they purchased for about €180m. That site also has permission for 300,216 sq ft (17,891 sq m) of offices.
More residential development could also enhance the competitiveness of the area when it comes to attracting office occupiers.
After the crash, the south docklands was quicker to respond to resurgent demand for new offices. Consequently as a number of the International Financial Services Centre (IFSC) offices became dated, they could not command the high rents attained on the southside. Some north docklands offices have seen rents range from the low to mid €40 per sq ft. These compare to around €60 per sq ft being attained for new prime southside offices.
However the gap is narrowing and when The Exchange, the first new north docks speculative office development since the crash, recently completed its lettings, landlords IPUT and the Cosgrave Property Group, benefitted from rents of around €50 per sq ft.
A similar level was achieved last August when Ballymore and Oxley let No 2 The Landings with over 9,300 sq m (110,104 sq ft) of offices to WeWork. Since then No 2 was bought by South Korean real estate firm JR AMC for €106.5m, or €7.7m over the guide price quoted by CBRE and Knight Frank. Colliers acted for the purchaser.
Two other new developments due for completion in 2020 are also quoting rents at similar levels.
These include The Exo, promoted as Dublin's tallest office building comprising 15,794 sq m (170,000 sq ft) over 17 floors. Positioned overlooking The Point Square and Dublin Port, David O'Malley of Savills is quoting an average of €48.50 per sq ft for the entire, if let on a floor-by-floor basis. Some upper floors in the Nama-backed building are priced at €55 per sq ft.
Nearby at 91/94 North Wall, TIO and Bennetts are developing a further 18,581 sq m (200,000 sq ft) of offices branded as North Docks. These will be accommodated in two buildings both of which will have river frontage and Savills are quoting €49.50 per sq ft for the entire.