The Economic and Social Research Institute (ESRI) has warned of serious supply constraints in the Dublin office market, saying a new employer of 500 people would have to wait almost two years for suitable accommodation in the city.
In new research undertaken with commercial agents Jones Lang LaSalle (JLL), the ESRI pointed to increased building since growth returned to the Irish economy. However, it said the lack of construction after the crash could still constrain new multinational investments and the expansion of existing projects.
The research note, by David Duffy of the ESRI and Hannah Dwyer of JLL, found that initial foreign direct investor requirements for office space were usually small-scale.
“Although choice has become more limited, there are buildings available in this size category at present. However, expansion is common and this requires readily available office space in key locations,” said the note. “As it currently stands, if there was a repeat of any company wanting to set up or relocate to a facility in Dublin for more than 500 people they would now have to wait until approximately [the first quarter of] 2017 for a suitable building to be available.”
They cited the expansion of Google’s Irish operation to 650,000sq ft from a base of 5,000sq ft in 2003 as an example of rapid occupier expansion. Similarly, Facebook expanded to 250,000sq ft from 21,000sq ft when it entered the market in 2009.
“There are other tech occupiers entering the market now that may become the next big growth company, or established companies in Ireland that are now starting to show growth that will also be looking for space in the short-term . . . It is important that the market is able to facilitate this type of occupier demand.”
Some 1.4 million sq ft of new office space is currently under construction in the city centre, of which 40 per cent is pre-let, and 0.7 million sq ft is under refurbishment, of which almost 0.1 million sq ft is reserved.
“In addition to the space currently under construction, there is potentially 1.6 million sq ft of space that could be delivered in 2017 and 2018.”