Dublin office market shows early signs of revival

Stripe has announced it will lease a new office, while Apple, Workday and Denmark’s Danske Bank are seeking new space

The return of interest in commercial buildings could provide some relief to landlords who developed Grade A spaces before the pandemic, only to later see businesses lay off staff or shift to work-from-home policies.  Picture: Patrick Bolger/Bloomberg

Dublin’s office leasing market is showing early signs of a revival as technology companies ranging from Apple to Stripe look to grow in the capital amid rising demand for newer, greener workplaces that comply with environmental regulations.

Apple, Workday and Denmark’s Danske Bank are seeking new space for their offices, people familiar with the matter said. Stripe has announced it will lease a new office.

The return of interest in commercial buildings could provide some relief to landlords who developed Grade A spaces before the pandemic, only to later see businesses lay off staff or shift to work-from-home policies. 

Ireland was disproportionately exposed to the downturn given its status as a hub for many multinational tech companies, thanks largely to its corporate tax breaks.

For instance, Meta announced it was cutting about 11,000 jobs globally in November 2022, and a month later, decided against occupying part of its recently completed European headquarters in Dublin. It instructed its broker to sublet space to others over a year ago.

Plunge in valuations

Several landlords have been hit by a plunge in valuations of new office buildings in some parts of Dublin, particularly the North Docks. They were already down as much as 50% from their peak in that district, Bloomberg News reported in April. 

Assets have slipped into bankruptcy protection there after some US tech firms scaled back the amount of new space they leased and borrowing costs rose.

Take-up picked up in the second quarter, according to a Bannon market report earlier this week, reaching more than 870,000sq ft in Dublin, a more than fourfold jump from the 197,000sq ft transacted in the prior three months. The report said the figures were, in part, boosted by space in excess of 150,000sq ft assigned to Stripe.

“It is the first sign of the TMT sector beginning to become active again,” the report said, referring to industries linked to tech, media and telecommunications.

The increasing interest in newly built offices is also raising questions about the future of older, less desirable properties and fueling concerns it might create a two-tier market, where ageing buildings face refinancing challenges and the risk of being left empty.

Danske Bank is considering leasing a 7,500-square-foot space in a new development called The Shipping Office, downsizing marginally from what it has now in an older building. 

Bank of New York Mellon Corp is also leasing space there, developer Marlet Property Group announced last month. A representative for Danske, without elaborating, said the firm was still considering options.

Apple is also in the early stages of scouting for additional new space to lease, the people said, adding developments floated include Wilton Park, the Sidings and College Square. One person said it was in the market for as much as 90,000sq ft of space. Apple did not immediately respond to a request seeking comment.

Software firm Workday is looking at options including a new development called Cooper’s Cross in the troubled North Docks, sources said. It was previously looking at a 550,000sq ft campus, according to its website. A representative said the company “hopes to be in a position” to confirm a new office location toward the end of 2024.

Though many tenants are looking to expand, some of them are downsizing their original plans.

Microsoft-owned LinkedIn had intended to occupy all of the 55,750sq m in the Wilton Park development but now plans to use only about 14,900sq m. It is subletting the rest of the space and Stripe announced earlier this week it would take up space in the development.

Joan Henry, chief economist at Knight Frank’s Irish arm, however, flagged an upcoming squeeze in supply. She said about 600,000sq ft are due to be completed through the remainder of 2024, 40% of which is pre-let. Meanwhile, 30% of space due in 2025 is pre-let, while that number is 75% for the following year, she added.

“Looking ahead, the pipeline rapidly tightens,” Ms Henry said. “There is no new space due to complete after 2026.”

Bloomberg