Irish benefits from Brexit bounce may be short-lived
The Dublin commercial property market is poised to take advantage of the UK's decision to vote in favour of Brexit, but the immediate and short-term benefits for the capital are the only ones that can be predicted with any degree of certainty.
That's the view of Jones Lang LaSalle managing director John Moran as the shock waves sent by Britain's move towards the EU exit door continue to reverberate across the world's financial markets.
Speaking to the Irish Independent, Moran said that while he and his colleagues were expecting "a bit of a bounce" in the short term from funds seeking to relocate their back office functions to Dublin in order to secure a 'European passport', there was a danger that the speculation surrounding the potential influx of jobs from the City of London could be "overplayed".
He said: "There is a danger that it [the influx] could be overplayed. I don't think there's going to be [an influx] at the level people are speculating about. I think it will be modest, but everything comes with a caveat that we are in uncharted waters and we really don't know how it's going to pan out.
"On the balance of probabilities, in the short term it's probably good for commercial and residential real estate in Ireland. In the medium term, it's wait and see and watch, as we don't know what the overall impact is going to be on the Irish economy, and that's crucial to the performance of property," Moran added.
Asked what size floor plates firms seeking to relocate their back office functions to Dublin in the short term might require, Moran said: "We think the numbers of people will be in the region of 40 to 50, so you're talking about 8,000 to 10,000 square feet maximum floor plates. I would say that's where it's likely to be. M&G Investments are moving some back office functions here."
He said the Brexit vote had made no impact to date on the €500m in deals JLL was currently negotiating with US-based and European-based investors.
He said: "They're very positive. We have about €500m worth of transactions ongoing at the moment, which are roughly 50:50 split between domestic and international buyers. We're seeing no sign of those, at this moment in time, slowing down."
JLL's research shows that there is 3.5m sq ft of commercial space under construction in Dublin, with 41pc of that space already let. Commenting on the potential to meet demand in the short term for office space, JLL head of research Hannah Dwyer said: "For an occupier looking for a new-build office with completion in 2016, there are only two options in Dublin city centre: Velasco and 21 Charlemont, and one in the suburbs, Block H Central Park.
"There has been some refurbishment activity which has brought space to the market, and there is currently 500,000 sq ft of available space under refurbishment that will offer quality space with flexibility around lease terms to tenants."