Tech giants are poised to mop up more Dublin offices, boosting commercial rents in the city, a new report shows.
Social media businesses Linkedin and Tiktok took two of last year's three biggest office leases in the capital, where many multi-nationals have their European HQs.
Letting agent HWBC says demand from overseas investors for Dublin offices, particularly technology companies, continues to be extremely strong.
The property business adds that it is “aware of several active mandates” from multi-nationals seeking space in the Republic’s capital for 2022.
It does not name prospective investors. Recent reports said Stripe, the payments company founded by Limerick brothers, John and Patrick Collinson, is seeking space for 2,000 workers in Dublin.
Others claimed Russian tech specialist, Yandex, was hunting for a base in the city.
HWBC ’s Dublin office report for the 2021 says foreign direct investors and tehnology businesses continue to dominate the market.
Iain Sayer, HWBC 's investment director, said that such companies are once again likely to feature on this year's list of top 10 office deals in the city.
Fears that the Organisation for Economic Co-operation and Development’s agreement, diluting the Republic’s favourable tax regime, would hit this demand proved unfounded, notes the firm.
Its report points out that State development agency, IDA Ireland, lured record levels of new jobs and investment to the Republic in 2021.
HWBC argues that “in some ways the new tax agreement could be viewed as a positive” as it gives certainty.
Average rent stablised at €57.50 a square foot in Dublin during 2021, but the property firm predicts this will increase as demand aided by multi-national interest picks up through this year.
Easing restrictions and a gradual return to the office “should support the recovery, assuming no new variants of concern emerge”, says the report.
HWBC believes that incentives for tenants will remain part of any deals done, but it does not see rents retreating.
Businesses are also looking for buildings with low energy use, the firm cautions.
In addition, climate change policy is pushing landlords and institutional investors to replace older offices with newer buildings that emit less carbon.
Accountants KPMG took out the biggest lease in Dublin last year when they agreed to take 288,500 sq ft at Harcourt Square from listed developer, Hibernia Real Estate Investment Trust.
Lease
Chinese social media behemoth, Tiktok, was second with its deal to lease all of the 216,000 sq ft in the Sorting Office from builder Marlet.
Linkedin’s agreement to occupy 57,000 sq ft at One Park Place, Hatch Street, was number three.
HWBC said 2021 was a “bumpy” year, with tough Government Covid curbs hitting business in the opening months.
Overall, businesses agreed to lease 1.62 sq ft from landlords in Dublin last year, 26 per cent below the long-term average.
Deals in the final quarter, spurred by KPMG and Tiktok, accounted for 60 per cent of the year’s total.
Mr Sayer said the market had reached a turning point. “The surge in demand in quarter four 2021 is continuing into 2022, which means it is unlikely that prime rents will fall any further,” he added.
