Tuesday 17 July 2018

WeWork land great gig in One Central Plaza space

WeWork is taking 73,000 sq ft of office space at One Central Plaza overlooking Temple Bar and Dame Street, where the gig economy will flourish
WeWork is taking 73,000 sq ft of office space at One Central Plaza overlooking Temple Bar and Dame Street, where the gig economy will flourish
Central Plaza
Central Plaza

Donal Buckley

Dublin's gig economy meets Dublin's gig lifestyle: That is one way to describe the deal by global shared office provider, WeWork, to take 73,000 sq ft of space at One Central Plaza, the former Central Bank overlooking Temple Bar and Dame St.

From some of the eight floors, co-working occupants who do their gigs on their laptops and tablets can share grandstand views of the music, comedy and drama gigs that take place in the surrounding area.

It looks like a natural fit and the building could well become an icon for Ireland's gig economy.

Defined as a labour market characterised by the prevalence of short-term contracts or freelance work, the gig economy is a key factor driving demand for flexible office space in Dublin and indeed globally.

Like entertainment gigs, their office equivalent - known as co-working - bring a much stronger social dimension to sole trader and small firm work space. Hence the natural fit with Temple Bar.

Indeed, this fleet of foot style of office occupancy is increasingly being copied by the larger corporates.

Up to recently, many corporates had been reluctant to offer permanent staff jobs on fears that new technology may completely disrupt their business models.

Consequently, larger corporates have also become more reluctant to commit to long-term leases and they too are increasingly switching to flexible offices.

Marie Hunt of CBRE says that a key driver of demand in Dublin has been the shortage of office supply that became apparent from 2015 onwards.

In turn this motivated landlords to seek tenants who were willing to commit to longer and less flexible leases than were the norm after the crash.

However, this reduction in lease flexibility "has caused an issue for many occupiers, making flexible office space an attractive option", she adds.

Such flexible space offers less restrictive lease terms which in turn reduces occupiers' risk from long-term major overheads.

Instead, occupiers can opt to simply plug-in their own PCs or laptops and start work immediately, without wasting time dealing with utility companies, paying city council rates, property insurance, managing fire drills, planning applications, fit-out etc.

Consequently, a market where demand was traditionally driven by sole traders and SMEs has seen larger corporates take more of this flexible space.

The strength of this demand has seen new Irish and overseas operators enter the Irish market while existing operators have upped their game.

Recent research in Savills' Skyline Survey found that in the last two years the amount of space let by landlords to serviced office providers in Dublin increased from 11,540 sq ft in 2015 to 188,400 sq ft in 2017.

According to John Ring of Knight Frank, agents on Central Plaza, operators in the flexible and serviced office market have taken 221,000 sq ft of offices in Dublin this year.

In Dublin 1, 2 and 4 alone CBRE estimates that by the spring of 2018, flexible office space totalled more than 300,000 sq ft.

Savills estimate that the serviced office market share has increased from 0.4pc to 20pc of office take-up in the first quarter of this year.

Now WeWork is beginning to dominate take-up figures. Its deal with Hines and the Peterson Group for Central Plaza will bring to 278,000 sq ft the amount of space that WeWork is taking to date in Dublin.

It also includes Dublin Landings on north Docklands, Iveagh Court on Harcourt Road and 1GQ near Tara St Dart station.

Traditionally in the Dublin central business areas, the market was restricted to serviced office providers, such as Glandore and Pembroke Hall.

International operator Regus also expanded into nine locations in Dublin including: Regus House Harcourt; Alexandra House, Ballsbridge; Santry; The Chase, Sandyford; Regus Dublin Airport and The Gables, Foxrock and it plans a tenth in the near future. It also operates in Cork and Limerick.

In keeping with the increasing demand for the more informal co-working accommodation, Regus' parent IWG introduced its Spaces brand to Dublin and took 34,390 sq ft at Hibernia' REIT's building at 77 Sir John Rogerson's Quay, Dublin 2.

It will pay rent of €1.8 million, or about €52 per sq ft, while it is quoting €299 per month for a co-working desk and €899 per month for a two-person office.

However, the rates can vary depending on the perks involved in membership fees, which can include coffee and social, formal or informal business events which operators organise. These create a membership ambience which enable clients to network with each other for new business or career opportunities.

A recent Cushman & Wakefield report says about 20pc of operators' revenues come from services, such as meeting room bookings, IT and telecoms services, events, beverages and food services. Some even provide gyms.

Long-established providers of co-working hot desks include RDS Ballsbridge.

It includes free tickets to the Dublin Horse Show among its membership perks.

Georgina Dillon of Savills says that, typically, hot desks can range from €250 to €595 per month for the full package memberships.

Individual desk rates are from €400 with few amenities to €950 for full amenities in private offices.

One of the newer Irish operators, Iconic, recently offered a low rate of €49 for one day or eight hours per month.

It also charges a one-off set up fee of €39 plus VAT for all memberships.

Ms Hunt says that Irish landlords and developers are beginning to recognise that flexible office operators as a complement to their traditional leased space.

Indeed, some of the largest developers have done deals with the new operators.

Ballymore has done a pre-let deal with WeWork for 99,500 sq ft at No. 2 Dublin Landings next to the Central Bank in North Docklands. Hibernia REIT, as well as its deal with IWG's Spaces, has done two deals with Iconic.

Its first was for 11,000 sq ft at SOBO Works in Windmill Lane and its second was for 21,000 sq ft in Clanwilliam Court. Under its latter agreement, Iconic manages the business operations, with the income generated being shared with Hibernia.

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