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RESEARCH
OCCUPIER TRENDS INVESTMENT TRENDS MARKET OUTLOOK
DUBLINOFFICE MARKET REVIEW AND OUTLOOK 2018
2
SUMMARY REVIEW AND OUTLOOK 2018Total space let across the top ten deals in 2017 exceeded the combined top ten deals completed between 2009 and 2016 as new supply unlocked pent-up demand.
1. Ireland was the fastest growingeconomy in Europe for a fourthconsecutive year in 2017 as theeconomy expanded by 7.3%
2. Take-up reached 3.6 million sq ftin 2017 – the highest level ever
3. Prime Grade A rents finished 2017at €62.50 psf
4. Prime yields compressed to4.00% by year-end, down from4.50% at the start of the year
5. 1.9 million sq ft of office space wascompleted in 2017 with 2.7 millionsq ft projected for 2018
Qtr Property Tenant Sector Size (sq ft)
Q4 One Microsoft Place, Leopardstown, Dublin 18
Microsoft TMT 300,000
Q4 100 & 300 Capital Dock, Sir John Rogerson’s Quay, Dublin 2
Indeed TMT 211,393
Q2 The Beckett Building, East Wall, Dublin 3 Facebook TMT 170,000
Q2 Block H, Central Park, Dublin 18 AIB Finance 158,000
Q4 One Wilton, Wilton Terrace, Dublin 2 LinkedIn TMT 152,000
Top 5 office leasing transactions, 2017
Source: Knight Frank Research
EconomyA pick-up in economic growth and the continuation of an accommodative monetary policy will support investment flows to European real estate in the coming year. Data from Eurostat shows that the European economy expanded by 2.5% in 2017, outpacing the United States which grew by 2.3%. The rosier backdrop on the continent added further impetus to the domestic performance in 2017 as Ireland was the fastest growing economy in Europe for a fourth year in a row according to the European Commission.
While growth is expected to moderate from the 7.3% recorded last year to 4.4% in 2018 and 3.1% in 2019, Ireland will remain in the upper echelons of the European growth table in the coming years. The labour market edged closer to full employment in 2017 as the circa 50,000 new jobs created brought the unemployment rate to 6.2% at year-end. According to our calculations and factoring in depreciation of existing stock, this will have resulted in office occupier demand arising from jobs growth
matching the new office space supply of 1.9 million sq ft delivered in 2017.
Occupier market2017 saw the highest level of activity ever recorded in the Dublin market, with 3.6 million sq ft let as the market expanded for the fifth consecutive year. While robust levels of letting activity were
5% WESTSUBURBS
2% NORTHSUBURBS
SOUTH SUBURBS
19%
FRINGE
13%
CITY CENTRE61%
Source: Knight Frank Research
FIGURE 1
Take-up by location, 2017
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DUBLIN OFFICE MARKET REVIEW AND OUTLOOK 2018 RESEARCH
Following nine quarters without movement between Q1 2015 and Q2 2017, prime office yields contracted by 0.25% in both Q3 and Q4 to finish 2017 at 4.00%. The renewed downward pressure on yields reflects the transitioning of the Dublin market to core status in the eyes of international capital markets, which is attracting funds with global core mandates to bid here. This yield compression marks the latest phase of tightening that the Dublin market has undergone following the recovery phase which ran
KNIGHT FRANK VIEW ON RISK from 2012 to 2015. That phase was largely driven by aggressive rental growth expectations as Ireland’s economic recovery took hold and Dublin moved from a distressed market to a recovery market. With the recovery now firmly established, the latest yield movements reflect the entry of longer-term international capital with lower return expectations seeking security of income, liquidity and diversification benefits, qualities which the Dublin office market now present.
€0
€10
€20
€30
€40
€50
€60
€70
2016
2015
2014
2013
2010
2011
2012
2008
2009
2007
2006
2005
2017
Source: Knight Frank Research
FIGURE 3
Dublin prime office rents € per sq ft per annum
FIGURE 2
Office take-up sq ft
0
50,0000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
2014
2017
2015
2016
2013
2010
2011
2012
2008
2007
2006
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2009
Source: Knight Frank Research
observed throughout the year, the final quarter witnessed an average deal size of 23,852 sq ft – well over double the norm for a typical quarter – as a number of large deals transacted. In fact, total space let across the top ten deals in 2017 exceeded the combined top ten deals completed between 2009 and 2016 as new supply unlocked pent-up demand.
The demand was mainly driven by the TMT (Technology, Media and Telecommunications) sector which accounted for 51% of take-up with Microsoft’s occupation of their new 300,000 sq ft campus in Leopardstown and Indeed’s taking of 211,000 sq ft at the soon to be completed Capital Dock the largest of these. LinkedIn, Facebook and Google also substantially increased their footprint in 2017.
While TMT was the standout performer, there was an increase in activity across the market, with the Finance and State sectors also performing particularly well. Finance accounted for 20% of the market, led by AIB who let 273,000 sq ft across two locations – 10 Molesworth Street and Block H, Central Park – while the State accounted for 10% of the market, the largest being the OPW’s letting of 143,000 sq ft at Miesian Plaza.
Activity continued to focus on the city centre which accounted for 61% of take-up, followed by the south suburbs with 19% and the city fringe with 13%. Looking ahead, we anticipate another strong year in 2018 from the tech sector
as many of the major players here continue to expand and also as some of the US companies which might have landed in London will now look to Dublin as their base for Europe as a result of Brexit. We also expect to see an increase in the number and size of deals that will be done as a direct result of Brexit in the financial and professional services sectors with the likes of Morgan Stanley, Bank of America, CITI and Goldman Sachs all having declared their intention to expand their presence in Ireland. The vacancy rate declined by 0.1% in Q4 to stand at 7.2% at year-end, down from 7.7% at the beginning of the year while rents grew from €60.00 to €62.50 psfover the period.
Development marketThe recovery of office development activity continued in earnest in 2017, with 1.9 million sq ft of office accommodation delivered, the largest amount of space to be completed this cycle. 83% of this space has already been let, with notable completions including new headquarters for Microsoft, LinkedIn, Amazon and The Central Bank. Looking ahead, more than 2.7 million sq ft is due to come on stream this year of which approximately 40% will be in the docklands.
The delivery of Ballymore Oxley’s No.1 and No.2 Dublin Landings in the north docklands will continue the rejuvenation of this area, while Kennedy Wilson’s Capital Docks, Park Development’s Reflector, Irish Life’s City Quay and
Hibernia REIT’s 1SJRQ will further enhance the appeal of the south docklands. Additional space will also be delivered in suburban locations including Elm Park and Central Park where Chartered Land/Starwood Capital and Green REIT are developing respectively. While the increase in the development pipeline will go some way to addressing pent-up demand, 34% of 2018 delivery has already been let suggesting that the disequilibrium between demand and supply will persist.
InvestmentThe market in 2017 was defined by a stabilisation of investment volumes with €2.3 billion worth of deals changing
54
LinkedIn HQ SiteGrand Canal/Fitzwilliam SqFloorspace: 100,000 sq ft Delivery date: Feb 2017
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theconvention
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GRAFTONSTREET
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GOVERNMENTBUILDINGS
ST STEPHEN’SGREEN
MERRIONSQUARE
The Beckett Building, East WallDate: Q2 2017Rent: €22.00 psf Take-up: 170,000 sq ft Tenant: Facebook
100 & 300 Capital Dock, Sir John Rogerson’s QuayDate: Q4 2017Rent: €53.50 psfTake-up: 211,393 sq ft Tenant: Indeed
5 Grand Canal SquareDate: Q4 2014Rent: €45.00 psfTake-up: 126,376 sq ft Tenant: Facebook
Burlington PlazaDate: Q1 & Q3 2014Rent: €27.50 psfTake-up: 102,579 sq ft Tenant: Amazon
Cumberland HouseDate: Q3 2015Rent: €50.00 psfTake-up: 85,000 sq ft Tenant: Twitter
5 Hanover QuayDate: Q4 2017Rent: €57.50 psfTake-up: 61,333 sq ft Tenant: Delphi
55 CharlemontDate: Q2 2017Rent: €53.50 psfTake-up: 57,865 sq ft Tenant: Zendesk
21 CharlemontDate: Q2 2017Rent: €55.00 psfTake-up: 36,834 sq ft Tenant: Viasat
1WMLDate: Q1 2017Rent: €55.00 psfTake-up: 35,000 sq ft Tenant: Informatica
1 Dockland CentralDate: Q4 2015Rent: €45.00 psfTake-up: 27,500 sq ftTenant: Hubspot
Cumberland HouseDate: Q3 2016Rent: €53.85 psfTake-up: 33,104 sq ftTenant: Mobile Travel Technologies
31-32 Golden LaneDate: Q2 2017Rent: €47.00 psfTake-up: 31,000 sq ft Tenant: New Relic
40 Molesworth StreetDate: Q2 2017Rent: €60.00 psfTake-up: 30,000 sq ft Tenant: Jet.com
1WMLDate: Q2 2017Rent: €55.00 psfTake-up: 23,767 sq ft Tenant: Core Media
3 Grand Canal QuayDate: Q2 2016Rent: €65.00 psfTake-up: 19,095 sq ftTenant: Zalando
Vertium Date: Q4 2016Rent: €50.00 psfTake-up: 172,136 sq ftTenant: Amazon
VelascoDate: Q2 2017Rent: €55.00 psfTake-up: 51,096 sq ftTenant: Google
MontevetroDate: Q1 2011Rent: Owner-OccupiedTake-up: 211,000 sq ftTenant: Google
8 Hanover QuayDate: Q1 2016Price: €32,000,000Yield: 4.41% Purchaser: BNP ParibasTenant: Airbnb
21 CharlemontDate: Q3 2017Price: €45,000,000Yield: 4.00% Purchaser: La FrancaiseTenant: Viasat LinkedIn EMEA HQ
Completion Date: Q1 2017Type: DevelopmentOwner: LinkedIn Space Delivered: 126,045 sq ft
One WiltonCompletion Date: Q4 2019Type: Pre-letDeveloper: IPUT Size: 152,000 sq ft
4 & 5 Grand Canal SquareDate: Q1 2015Price: €233,000,000Yield: 4.31% Purchaser: UnionTenant: Facebook
2 Dockland CentralDate: Q1 & Q3 2017Rent: €52.50 psfTake-up: 32,480 sq ftTenant: Hubspot
4 Grand Canal SquareDate: Q4 2013Rent: €35.00 psfTake-up: 121,000 sq ft Tenant: Facebook
Two Haddington BuildingsDate: Q2 2017Rent: €48.00 psfTake-up: 28,385 sq ftTenant: Dentsu Aegis Network
DART RAIL LINE
KEY
SDZ BOUNDARY
INVESTMENTSDEVELOPMENTS
LETTINGS
LUAS TRAM LINELUAS TRAM LINE
TMT ACTIVITY IN CITY CORE
54
Note: All areas and delivery times noted above are approximate estimates only and subject to change
NORTHSUBURBS
WESTSUBURBS
SOUTHSUBURBS
COREDUBLIN BAY
DUBLIN OFFICE MARKET REVIEW AND OUTLOOK 2018 RESEARCH
6
Qtr Property Seller Buyer Approx price
Q4 Cherrywood Business Park, Co. Dublin
Hines Spear Street Capital
€€145.0 million
Q1 13-18 City Quay,Dublin 2
TIO Irish Life €€126.3 million
Q3 Gardiner House, Dublin 2
Kennedy Wilson IPUT €60.0 million
Q3 Blocks 4 & 5 Harcourt Centre, Dublin 2
Clancourt Group Ares €€47.0 million
Q3 21 Charlemont, Dublin 2
Rohan Group La Francaise €€45.0 million
Top 5 office investment transactions, 2017
Source: Knight Frank Research
0%
1%
2%
3%
4%
5%
6%
7%
8%
2016
2017
2015
2014
2013
2010
2011
2012
2008
2009
2007
2006
2005
Source: Knight Frank Research
FIGURE 5
Dublin prime office yields
0
1,000
2,000
3,000
4,000
5,000
2014
2017
2016
2015
2013
2010
2011
2012
2008
2007
2006
2005
2009
Source: Knight Frank Research
FIGURE 4
Irish commercial investment volumes € million
“ 46% of office investment transactions in Dublin were purchased by Irish buyers.”
US IRELAND EUROPE UK
BUYERS
VENDORS
FIGURE 6
Buyer and vendor source, 2017
Source: Knight Frank Research
hands. The lack of large lot-sized assets was best demonstrated by the fact that 17 deals in excess of €50million occurred in 2016 as opposed to six in 2017. Despite this, the market comfortably surpassed its 10-year average of €1.8 billion.
Office investment sales accounted for the largest proportion commanding 39% of the market or €891.4 million.Activity remained focused on Dublin with the capital attracting 93% or €830.4million of the total office investment
spend. The lack of prime opportunities in the city centre encouraged investors to move up the risk curve with the purchase of suburban assets and forward-funding opportunities becoming more commonplace. This was highlighted by the sale of the Cherrywood Business Park for €145.0 million and the forward-fundingof 13-18 City Quay for €126.3 million.
It was noteworthy that 46% of office investment transactions in Dublin were purchased by Irish buyers which represented a significant shift in the origin of the buyer profile given that purchasers from the US and Europe dominated the market in 2016. This can be somewhat attributed to the prevalence of smaller lot-sized assets which are mainly of interest to domestic private investors. However, there remains considerable depth in the market with buyers from the US and Europe accounting for 29% and 22% respectively. Prime yields compressed to 4.00% by year-end, down from 4.50% at the start of the year.
Looking ahead, 2018 should see an increase in prime office investment opportunities as developers and their funders seek to exit their positions as new office stock gets delivered and let. Additionally, the lowering of the required holding period, from seven to four years, for the exemption of capital gains tax should also encourage the disposal of assets.
7
DUBLIN OFFICE MARKET REVIEW AND OUTLOOK 2018 RESEARCH
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2017
2016
2015
2014
2013
2012
2011
2010
Pre
201
0
ALPHABET (GOOGLE)MICROSOFT/LINKEDIN
AMAZON
Source: Knight Frank Research
FIGURE 7
Evolution of large tech footprint in Dublin 0
200
400
600
800
1,000
1,200
2017
*
2016
2015
2014
2013
2012
2011
2010
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000 SPACE LET TO TMT
sq ft
€ millions
VC FUNDING TO TECH
Source: Knight Frank Research / Irish Venture Capital Association
*VC Funding for full year estimated by extrapolating trend for the first three quarters of the year
FIGURE 8
Relationship between TMT lettings and VC funding in Dublin
SPECIAL FOCUS: THE TMT SECTOR IN DUBLIN
Footprint comparison of top tech companies in key global locations
Source: Knight Frank Research
*as at 2nd January 2018
Company Business segment
Market value ($USD billions)*
Dublin (sq ft)
London (sq ft)
New York (sq ft)
Global HQ (sq ft)
Global HQ location
AppleConsumer Electronics
861 - 171,000 46,370 6,100,000 San Francisco, CA
Alphabet (Google)
Search 729 748,331 1,100,000 993,091 7,860,000 San Francisco, CA
Microsoft/ LinkedIn
Software 660306,448 &
191,49750,000 &
70,000331,427 &
195,24814,900,000
& 1,083,000Seattle, WA & San Francisco, CA
Amazon E-Commerce 564 288,805 793,000 700,697 13,600,000 Seattle, WA
Facebook Social Media 515 417,376 400,000 808,355 2,000,000 San Francisco, CA
Total 3,329 1,952,457 2,584,000 3,075,188 45,543,000
Office Stock 39,500,000 226,000,000 443,000,000
Footprint 4.9% 1.1% 0.7%
The Technology, Media and Telecommunications (TMT) sector has established itself as the most important sector in the Dublin office market, accounting for 51% of take-up in 2017, two and half times the next nearest sector of Finance which had a 20% market share. Just as important, the tech sector had a net take-up ratio of 62% which is much higher than the 45% experienced across the rest of the market. While the rise of the TMT industry has been a global phenomenon with implications for office markets across the world, few cities have
felt the impact of tech’s rise as keenly as Dublin with Alphabet (Google), Microsoft (owners of LinkedIn), Amazon and Facebook accounting for six of the top ten deals in 2017.
These companies are no longer leaders just in the tech space, but – in the preceding order – finished 2017, as the largest companies in the world by market capitalisation only behind Apple (European HQ in Cork). What’s more, despite their already large size, they are expanding rapidly and leading the race to become the first trillion dollar company. For example, Facebook’s revenue in Q4 grew by 48% year-on-year to USD$12.9 billion.
Aligning its fortunes with the world’s largest and fastest growing companies has been the primary factor in the expansion of the Dublin office market in recent years. As illustrated in Figure 7, the growth in large TMT firms in Dublin has mainly come post-2010, with the quantum of space taken increasing fourfold over the period. This is a trend that shows no sign of abating with further high-profile expansion announcements expected in 2018. Interestingly, Figure 8 shows that venture capital funding to tech in Dublin is trending upwards along with tech take-up which is supportive of the view that the arrival of these established global firms is helping foster start-up activity in Dublin.
Lastly, putting Dublin in an international context yields some interesting results. Although the top five companies occupy less space in Dublin than in London and New York in absolute terms – an estimated 2.0 million sq ft versus 2.6 million sq ft and 3.1 million sq ft respectively – they account for a much higher relative footprint in Dublin – 4.9% versus 1.1% and 0.7%. It is worth noting, however, that the space occupied across the three of these cities pales in
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© HT Meagher O’Reilly trading as Knight FrankThis report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by HT Meagher O’Reilly trading as Knight Frank for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of HT Meagher O’Reilly trading as Knight Frank in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of HT Meagher O’Reilly trading as Knight Frank to the form and content within which it appears. HT Meagher O’Reilly trading as Knight Frank, Registered in Ireland No. 385044, PSR Reg. No. 001266. HT Meagher O’Reilly New Homes Limited trading as Knight Frank, Registered in Ireland No. 428289, PSR Reg. No. 001880. Registered Office – 20-21 Upper Pembroke Street, Dublin 2.Investment Insight
2017 in Review
RESEARCHINVESTMENT INSIGHT - 2017 IN REVIEW
Despite a strong finish to the year - with €965.3 million transacting during Q4 - 2017 was defined by a stabilisation of investment volumes with approximately €2.3 billion worth of deals changing hands. While investor appetite for Irish real estate remained robust, volumes were constrained by a shortage of large lot-sized assets as a result of the decline in the deleveraging activity and loan portfolio sales which had characterised the market up until now. The lack of large lot-sized assets was best demonstrated by the fact that 17 deals in excess of €50.0 million occurred in 2016 as opposed to six deals in 2017, the largest of which
Office sales comprised of the largest proportion of activity with 39% of the market or €891.4 million. The lack of opportunities in the city centre induced investors to move up the risk curve with the purchase of suburban assets and forward-funding opportunities becoming more commonplace. This was highlighted by the sale of a confidential suburban asset for €145.0 million and Irish Life’s forward-funding of 13-18 City Quay for €126.3 million. Retail sales accounted for 32% of the total spend or €714.3 million. While half of this was driven by the disposal of shopping centres and retail parks, there was also significant interest in high-street retail assets,
€2.3bnworth of investmentstransacted in 2017
NORTHERNIRELAND
18%REST OF IRELAND
82%DUBLIN
FIGURE 2
Investment spend by location
Source: Knight Frank Research
FIGURE 3
Investment spend by sector
Source: Knight Frank Research
FIGURE 4
Investment spend by buyer origin
FIGURE 5
Investment spend by vendor origin
Source: Knight Frank Research
Other
United Kingdom
Europe
United States
Ireland
17%EUROPE
47%IRELAND
31%UNITED STATES
2%UNITED KINGDOM
2%OTHER
a4559d
83abb6
was Oaktree’s purchase of The Square Tallaght for €233.0 million.
Despite this, the market comfortably surpassed its 10-year average of €1.8 billion. Investors remained focused on Dublin, with the capital accounting for 82% of total spend.
demonstrated by Irish Life’s purchase of 100-101 Grafton Street for €50.1 million. Industrial sales commanded a 6% share of the market or €138.9 million with this asset type gaining in popularity in 2017 owing to its relatively higher yields and scope for rental appreciation as a result of the rapid growth in e-commerce. The largest industrial transaction was the off-market sale of a €30.0 million property in North Dublin. There was also heightened interest in alternative assets such as student accommodation, evidenced by the sale of the Montrose Student Residence to Hines for €37.6 million.
47% of all investment transactions in 2017 were purchased by Irish buyers which represented a significant shift in the origin of the buyer profile given that
4%UNITED KINGDOM
72%IRELAND
18%UNITED STATES
6%EUROPE
Residential
Student Accommodation
Multi Family
Hotel
Industrial
Mixed-Use
Retail
O�ce
6%INDUSTRIAL
39%OFFICE
32%RETAIL
4%MULTI-FAMILY
1%RESIDENTIAL
10%MIXED-USE
6%HOTEL
2%STUDENTACCOMMODATION
Source: Knight Frank Research
FIGURE 1
Irish commercial investment volumes € million
10 year average
0
500
1000
1500
2000
2500
Q1 2
014
Q3 2
014
Q4 2
014
Q2 2
014
Q1 2
015
Q3 2
015
Q4 2
015
Q2 2
015
Q1 2
016
Q3 2
016
Q4 2
016
Q2 2
016
Q1 2
017
Q2 2
017
Q3 2
017
Q4 2
017
Source: Knight Frank Research
RESEARCH
INDUSTRIAL MARKET INSIGHT - 2017 IN REVIEW
While rising employment levels and household incomes are underpinning increases in consumer spending, the proliferation of digital technologies means that a growing share of this expenditure is happening on-line. This was demonstrated in Eurostat’s 2017 survey on ICT which showed that 18% of Irish people purchased household goods on-line in 2017, up from 10% five years ago. This phenomenon has acted as a driving force behind recent demand for industrial space, with research by Standard Life Investments1 illustrating that e-commerce requires twice as much industrial space as traditional bricks and mortar retail for a given amount of sales.
Adding a further layer to demand, was the sharp increase in industrial production in 2017, with Investec’s Manufacturing Purchasing Managers’ Index finishing the year at 59.1 – the strongest reading in the history of the series – up from 55.7 a year earlier.
of take-up in the smaller deal-size categories highlights the fact that demand for industrial space was constrained by a shortage of large, good quality, modern stock. This shortage placed upward pressure on prime rents which climbed from €98 per sq m at the beginning of the year to finish 2017 at €100 per sq m. Secondary rents remained unchanged at €54-€65 per sq m.
An important feature of the market in 2017 was the return to speculative development which was made viable by rising rental levels and strong demand from occupiers. Green REIT continued it’s expansion of the Horizon Logistics Park by completing Unit B2 (3,100 sq m), which was let to DFS, and by commencing the construction of four further units. Two of these, Units D2 (7,400 sq m) and D3 (4,400 sq m), have been let to Kuehne+Nagel
252,452sq m of take-up transacted in 2017
FIGURE 3
Deal size share of market in sq m
Source: Knight Frank Research
86,061 sq m worth of deals were recorded in Q4, bringing take-up for 2017 to 252,452 sq m. The largest transaction of 2017 in Dublin was the purchase of Unit 103 of the Northwest Business Park in Q4. The unit is comprised of 12,550 sq m of industrial space and was sold to IPUT for €12.2 million. Sales continue to represent a smaller proportion of transactions, accounting for 46% of deals in comparison to lettings which comprised 54%.
Dublin North-West and Dublin South-West continue to be the most sought after locations, accounting for 46% and 44% of take-up respectively. In terms of deal size, 68% of take-up was comprised of less than 5,000 sq m, 23% was between 5,001 and 10,000 sq m, while only 9% was in excess of 10,000 sq m. The relatively large proportion
10,001+
5,001-10,000
2,501-5,000
1,001-2,500
501-1,000
<500
19%1,001-2,500 sq m
31%2,501-5,000 sq m
8%<500 sq m
9%10,001+ sq m
9%501-1,000 sq m
23%5,001-10,000 sq m
FIGURE 2
Take-up by location
Source: Knight Frank Research
South East
North East
South West
North West46%NORTH-WEST
44%SOUTH-WEST
3%SOUTH-EAST7%
NORTH-EAST
and an unnamed luxury goods retailer, with completion expected in Q2 and Q3 2018. Meanwhile, Units D4 and D5, which will extend to 6,959 sq m in total, will be completed later this year. Similarly, at the Dublin Airport Logistics Park, Rohan Holdings began the construction of Condor House (2,787 sq m) and Finch House (3,716 sq m) with completion due in Q1 2018, while speculative development also began at the 4,645 sq m Heron House which will
FIGURE 1
Take-up by type
Source: Knight Frank Research
46%SALES
54%LETTINGS
Unit 103, Northwest Business Park, Ballycoolin, Dublin 15 which Knight Frank sold in Q4 2017.
1. Standard Life Investments, How e-commerce is boosting logistics real estate, September 2017 <https://www.standardlifeinvestments.com/market_views/real_insite/ecommerce.html>[accessed 6th February 2018]
Industrial Insight 2017 in Review
RESEARCH
John Ring, Head of Research +353 1 634 [email protected]
Robert O’Connor, Research Analyst +353 1 634 [email protected]
CAPITAL MARKETS
Adrian Trueick, Director +353 1 634 2466 [email protected]
Peter Flanagan, Director +353 1 634 [email protected]
Ross Fogarty, Director +353 1 634 2466 [email protected]
OFFICES
Declan O’Reilly, Director +353 1 634 [email protected]
Paul Hanly, Director +353 1 634 [email protected]
Jim O’Reilly, Director +353 1 634 [email protected]
Gavin Maguire, Associate Director +353 1 634 [email protected]
Mark Headon, Associate Director +353 1 634 [email protected]
David Reddy, Associate Director +353 1 634 [email protected]
comparison to their operations in their respective Global HQ cities which stands at over 45.5 million sq ft combined.
RISKSTech crash – there are concerns that being too closely tied to the tech industry exposes Dublin to a Dot-com type crash as occurred in the early 2000’s. While apprehensions regarding toppy tech stock market valuations may be legitimate, the difference for many of today’s tech firms is that they have built-up large cash reserves from established revenue streams so they are well positioned to withstand fluctuations in market value.
Tax pressure – The EU ruling on Apple’s tax affairs in Ireland combined with a tougher stance by the United States on foreign cash holdings has resulted in Ireland’s tax policy coming under
Rank Year Tenant Property Sq ft
1 2017 Microsoft One Microsoft Place, Leopardstown 300,000
2 2017 Indeed100 & 300 Capital Dock, Sir John Rogersons Quay
211,393
3 2011 Google Montevetro, Barrow Street 211,000
5 2016 Amazon Vertium, Burlington Road 172,136
6 2017 Facebook The Beckett Building, East Wall 170,000
8 2017 LinkedIn One Wilton, Wilton Terrace 152,000
13 2014 Facebook 5 Grand Canal Square 126,376
14 2014 LinkedIn LinkedIn EMEA HQ, Lad Lane 126,045
15 2013 Facebook 4 Grand Canal Square 121,000
22 2015 Workday The Kings Building, Smithfield 95,000
Overall market ranking of the top TMT deals 2010-2017
Source: Knight Frank Research
unprecedented pressure. This is leading to fears that a key competitive advantage is being eroded. However, judging by activity in 2017, this has not deterred tech firms from pressing ahead with expansion plans in Dublin suggesting that the old IDA mantra of ‘Come for the tax and stay for the talent’ is proving true.
OUTLOOKWhile much of the discussion regarding potential benefits to the Dublin office market arising from Brexit has focused on the Finance sector, it is our opinion that the Tech sector holds the real potential for a Brexit bounce. With TMT companies highly reliant on sourcing skilled talent from across the EU, the uncertainty regarding foreign worker visas in the UK following Brexit may see firms choose to grow operations in Dublin rather than risk employee shortages in London.
Global Cities - The 2018 Report
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THE 2018 REPORT
4th EditionNGKF.COM/GLOBALCITIES
KNIGHTFRANK.COM/GLOBALCITIES
ELON MUSK
THE FUTURE OF REAL ESTATE
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THE TRENDS SHAPING 40 LEADING CITIES
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