Sretaw secures three new tenants for offices at 12 Duke Lane

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Sretaw PE (Private Equity), an investment and property development company headed up by Eamon Waters, has secured three new tenants for its newly-refurbished offices at 12 Duke Lane in Dublin’s Royal Hibernian Way. Theratechnologies, Dynamo, and AGF International Advisors Company Ltd have each agreed deals to occupy the property at rents ranging from €538 to €614 per sq m respectively.

Commenting on the agreement of the lettings at 12 Duke Lane, Lucy Connolly of Bannon, who represented the landlord, said: “Despite recent market commentary [on the office market] the level of inquiries we received was exceptional. It highlights the demand at present for small, modern, centrally-located floorplates. The rents achieved were at quoting levels and above.”

The new tenants at 12 Duke Lane were represented by David O’Malley of QRE, Shane Bourke of Irish Office Space and Emma Byrne of Finnegan Menton respectively.

Developed originally in the mid-1980s, 12 Duke Lane comprises 533sq m (5,737sq ft) of office accommodation over four floors and forms part of the wider Royal Hibernian Way scheme. The development, which is arguably best known as the location of the Davy Stockbrokers head office, extends to an overall area of 8,630sq m (92,888sq ft) and also includes around 1,950sq m (21,000sq ft) of retail and hospitality space.

The retail quarter is occupied by a number of well-known brands including Boylan’s Shoes, Carol Clarke Jewellers and Leonidas Chocolates, while the hospitality offering includes the Marco Pierre White steakhouse; Isabelle’s restaurant; and the Lemon & Duke bar, owned by Noel Anderson and his business partners, former rugby internationals Sean O’Brien, Jamie Heaslip and Rob and Dave Kearney.

Mr Waters acquired Royal Hibernian Way from Aviva Investors in 2021 for about €74 million. The agreement of the deal came just weeks after he and US private equity firm Blackstone secured the sale for €1.4 billion of Beauparc Utilities, which Mr Waters had founded, to Australian financial services giant Macquarie. The deal for the company which owns the Panda and Greenstar waste firms in Ireland is understood to have provided Mr Waters with a windfall of about €367 million, based on company filings prior to the announcement.

Article published by The Irish Times 

 

Bannon Office Pulse – July 2023

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Quarter 2 Dublin office take up exceeded 440,000 sq.ft. resulting in an increase in average deal size to 7,720 sq.ft. (24% increase on Q1 2023)

City Fringe and Suburban markets performed particularly well this quarter accounting for 60% of all take-up. Dublin continues to attract a diverse mix of industries with professional services, finance and state agencies the most active sectors this quarter with TMT accounting for just 6% of total take up, a decrease of 35% from the same quarter of 2022. We commence Q3 with over 665,000 sq.ft. of office space currently reserved.

See full details below together with expert insight from Lucy Connolly.

To view the full report, please click here.

Can offices form part of the solution to Dublin’s housing shortage?

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The Government has been grappling with a housing shortage for several years. As the demand for housing continues to outstrip supply, creative solutions are needed to address this pressing issue.

One potential solution that is gaining traction is the conversion of office spaces to residential units. This has come to the fore over the last number of weeks as the Government faces unyielding pressure to tackle the accommodation shortfall. Minister for Housing Darragh O’Brien is reportedly considering making planning exemptions to rules which would apply to repurposing office space to housing.

 

In an article in The Irish Times on May 22nd, it was reported that the Minister has “lobbied his Cabinet colleagues Simon Coveney, the Minister for Enterprise, Trade and Employment, on the issue, seeking his support for a plan that would convert offices built during the recent construction boom but are now underutilised”. The question is, is it feasible to repurpose a recently constructed Dublin office building into residential use?

[ ‘I never imagined such places existed’: What’s it like living in a converted office block? ]

The assumption here is that there is an oversupply of recently built office accommodation in Dublin city centre, but that is simply not the case. Offices built in the boom are in the main environmental, social and governance compliant (ESG-compliant), sustainable buildings. As has been widely reported by many in the property industry, these are and will be the buildings that are in demand for office use. The location of these buildings further enhances their desirability for that use, as we are seeing increased demand for well-located city-centre office buildings due to the availability of employee amenities and unrivalled transport links.

Where we do see an opportunity for such conversion is with older office buildings or so-called “brown buildings”. Occupier demand has shifted towards real estate that helps achieve ESG goals and policies, therefore there is an acceleration in demand for ESG-compliant office accommodation from many organisations.

Converting offices into residential units presents an opportunity to address this but there are challenges involved, and as we have seen from other countries, caution is advised for such projects

This movement in the market provides vacant possession to the owner to allow for redevelopment or refurbishment of these brown buildings into ESG-compliant offices or alternative uses. This is where the question of residential conversion is most relevant…residential conversion will be most practical where the office value is lowest and the conversion costs to residential use are more sensible than the cost of “greening” the building for office use. Ultimately, it is about sorting the “wheat from the chaff”.

[ Michael McDowell: Nobody is thinking about the aesthetics of our cities ]

Working with our sister company Evia Sustainability consultants, the Bannon office team is assessing the cost and practicality of bringing older buildings up to standard from a green perspective, and what that entails. If the maths don’t add up – that is, if the cost of greening an office asset exceeds the end value – then the owner is looking at a stranded building which is then a candidate for residential conversion.

Without a doubt, Dublin’s housing shortage necessitates innovative solutions. Converting offices into residential units presents an opportunity to address this but there are challenges involved, and as we have seen from other countries, caution is advised for such projects. Consideration must be given to zoning, building and planning guidelines and regulations. This consideration must relate to the practicality and ability to convert but also to the social factors, with access to amenities, transport, employment opportunities and social connections fundamental for the residents of the schemes and thus their successful transformation.

[ The Irish Times view on turning offices into homes: unlikely to provide a quick solution ]

Embracing this potential solution and implementing it correctly may hold the key to not only helping to solve a housing shortage but also providing options to owners of potentially obsolete office buildings.

Lucy Connolly is divisional director and head of offices at Bannon property consultants

As published in The Irish Times

At a Glance: Dublin Office Market Q2 2023

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Following a subdued Q1, Dublin office take up for the second quarter of the year reached 440,000 sq.ft. across 57 transactions. This brings the year to date figure to 724,500 sq.ft. Whilst Q2 take up is 53% ahead of Q1 figures, it reflects a H1 decrease of 28% versus the same period last year.

Dublin continues to attract a diverse mix of industries with professional services, finance and State agencies the most active sectors this quarter with TMT lagging behind significantly, accounting for just 6% of total take-up.

Roderick Nowlan, Lucy Connolly, Julia Halpenny

Here to Stay? – Investor & Occupier Demand for Space

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The effect hybrid working and ESG has, or will have, on office demand from office occupier, investor and owner standpoints cannot be considered in isolation. These influences must be considered within the wider office market ecosystem and how they operate in tandem to drive occupier decision making at lease event dates. The Covid Pandemic brought an instantaneous change to how we work whereas ESG requirements and regulations have been coming into the market at a steadier rate. While there is also uncertainty around the future of working models, that can be adapted and changed rapidly, there is no uncertainty about the increasingly important and dominant role ESG will play in the office sector. The ESG roll out will be slower and changes can be anticipated, however the ability to bring the stock to standard is a far more timely and resource intensive exercise. 

Hybrid working for businesses will effectively assess how staff utilise office space as a resource to produce output. Ultimately it is the company who can decide how to implement their working models and the decisions will be led by the type of work carried out by the business, the need to attract and retain talent and the model that allows the business to grow and produce output efficiently.  Both staff and workspace are a factor of production for a business and how the two are utilised against each other effectively to generate product should ultimately be the key focus of any commercial business. This should craft the post-pandemic workplace in the years ahead and this will likely differ industry by industry. 

ESG considerations will continue to become more prominent drivers in the decision-making process for both occupiers, owners and investors. Currently, ESG in commercial real estate is very much lead by the private and financial markets, with factors such as corporate mandates and lender requirements influencing the demand for ESG grade space. It is envisaged that the regulatory environment (in an EU context) around occupation and investment will become more scrutinous and this will further drive the demand (and requirement) for ESG grade space in the future. 

Occupiers will be looking into the impacts, whether they be positive of negative, that revised working models have on their ability to create an attractive and productive workspace as well as any ESG led requirements that are being implemented on a company specific or regulatory basis. The implementation of these will likely crystallise at either a lease break or expiry where spatial requirements can be most practically revised. Property owners will have to be cognisant of their occupiers’ requirements against key lease dates and how these correspond with asset management strategies to protect both the rental and market value of the building. Alternatively, investors must consider how to preserve or improve on an asset’s income at purchase or where opportunities may lie in bringing brown buildings into a green market. 

Bannon have a suite of services available to assist CRE owners, occupiers and investors in strategic real estate decisions and ESG insights. Please feel free to reach out to discuss by emailing consultancy@bannon.ie.

 

Author:                 George Colyer, Surveyor, Bannon 

Date:                     16th June 2023

 

Work – From Somewhere to Something

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The Covid-19 Pandemic has led to a paradigm shift in the traditional approach to office-based work. Following the initial ‘work from home’ requirements during the Pandemic, many businesses have since adopted alternative working models away from the traditional ‘in the office at your desk’ to models such as shifting staff to full work from home, flexible working options and hybrid working models.  

The widespread shift to more flexible and agile working models has moved the concept of ‘work’ from a physical place to an activity. The net effect of this does not mitigate the need for a physical office, rather it changes the role and function the office plays in the business and how the space is utilised to meet staff working habits and models and drive business goals. While the full effect of Covid-19 on working models is yet to be seen, the consensus of many businesses and organisations has been to adopt a form of hybrid working to give staff more flexibility and that this is required in order to maintain and attract talent.  

Hybrid working models will not necessarily impact an office development’s occupational capacity, rather it allows the building to attract occupiers with larger workforces. For example, if a development with a capacity for 1,000 workers is occupied by a business that implements a 50/50 split between WFH and office, the scheme can, in theory support an occupier with a 2,000 strong workforce. In practice this may be less as businesses will require full attendance by teams at different times and we have already seen the TWT (Tuesday, Wednesday and Thursday) phenomenon at play as workers prefer to work from home on Mondays & Fridays. Despite this, the classic rule of thumb of allocating 10-15 sq.m. of space per employee to gauge an occupier’s spatial requirement is clearly being challenged. Paradoxically, there may be a positive spin off for the locations where these offices are located as the total number of distinct visitors during the week increases. 

There is still uncertainty around the long-term effect of Covid-19 on long term office working models. This is manifesting itself in the leasing environment through shifting occupier space requirements, greater lease flexibility and increased demand for fitted-out spaces. Businesses will use lease events such as expiries and break options to rationalise their workplaces to reflect their adopted work models. As workplaces continue to adapt and adopt modern working practises it is important for occupiers to be cognisant of the spatial requirements needed to accommodate and attract the modern workforce and for investors and owners to be cognisant of the effect these work models will affect demand levels and lease events. 

If you wish to discuss developments in the office markets further, please contact offices@bannon.ie. 

 

Author:                 George Colyer, Surveyor, Bannon 

Date:                     2nd June 2023

M50 Business Park

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M50 Business Park provides c. 18.890 sq. ft. of modern fitted office accommodation on new lease terms. Occupying a high profile location at the junction of Ballymount Avenue and Ballymount Road Upper, the available space provides both open plan and cellular office accommodation, as well as meeting rooms and a canteen facility. Offices available from 9,000 – 18,890 sq.ft. with generous car parking provisions.

For more information contact Lucy Connolly or Julia Halpenny.

Bannon Office Pulse – May 2023

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Bannon’s latest Office Pulse is now live.

Take up for the first quarter of the year reached 278,000 sq.ft. across 45 transactions, representing a 45% decrease on Q1 2022. Deal sizes have decreased this quarter with 76% of transactions falling into the sub 5,000 sq.ft. bracket resulting in an average deal size of 6,300 sq.ft. Lease flexibility continues to be the dominant driver in demand. There is over 600,000 sq.ft. currently reserved (71 Transactions) which should boost Q2 figures.

See full details below together with expert insight from Lucy Connolly and Cillian O’Reilly.

To view the full report, please click here.

Greening of Dublin office market presents threat and opportunity for owners of older buildings

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The Dublin office market is experiencing a game of musical chairs as environmental, social and governance (ESG) goals and policies drive office occupiers to relocate to more sustainable, greener buildings. This has been further accelerated by changing occupier demands. It has created a redevelopment and refurbishment opportunity that attracts occupiers from older, so-called brown buildings.

Many owners and occupiers recognise the opportunity to achieve their ESG goals and policies while reducing occupational costs. Moreover, the ability to attract high-quality occupiers is only possible with a green building. The game of musical chairs provides vacant possession to allow the redevelopment or refurbishment of brown buildings, thus enhancing the value of the asset.

One example of this trend is AIB’s decision to vacate Irish Life’s 1 Adelaide Road base and consolidate to 10 Molesworth Street. This move allowed Deloitte, which occupies Deloitte & Touche House on Earlsfort Terrace, to commit to the redeveloped 1 Adelaide Road. As a result, the Earlsfort Terrace property will become available to Iput for its proposed redevelopment.

[ Older office buildings can be as good as new. They’re often even better ]

Another example is the relocation of An Garda Siochana from its Harcourt Street headquarters to the recently completed Walter Scott House on Military Road. Hibernia Real Estate Group swiftly demolished the building, paving the way for the construction of Harcourt Square, which will become KPMG’s new Dublin office upon completion. This shift will result in Kennedy Wilson achieving vacant possession of KPMG’s office on Stokes Place, which received the green light from An Bord Pleanála earlier this year.

Waterfront South Central in Dublin’s north docklands is set to become the new European headquarters of Citi Group. The deal was made with Ronan Group Real Estate (RGRE), which acquired Citi Group’s premises at 1 North Wall Quay. The current premises will no doubt be redeveloped or refurbished and reintroduced to the market as a green building.

Aside from the discussed redevelopment opportunities, there are significant quantities of grey space available, including Fibonacci Square, which is being leased by Meta; 1 Cumberland Place, leased by Twitter; and 2 and 3 Wilton Park, leased by LinkedIn. This Grade A ESG-compliant space will undoubtedly be involved in the next round of musical chairs in the Dublin office market. As occupiers of older buildings take up this space, it will free up further development opportunities. The attractiveness of these options to developers will depend on the specifics of the building, location, floor-to-ceiling heights, and the practicality and cost of upgrading them to either new offices or alternative uses.

The game of musical chairs has created opportunities for owners and occupiers to achieve their ESG goals and policies while simultaneously reducing occupational costs. This trend also presents an exciting opportunity for the redevelopment and refurbishment of brown buildings and the enhancement of asset value.

Lucy Connolly is divisional director and head of offices at Bannon

Article by The Irish Times

 

Bannon Office Pulse – February 2023

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Bannon’s latest Office Pulse is now live!

This month’s Office Pulse includes expert market insights from Lucy Connolly and Cillian O’Reilly. In this edition we ask; As tech sector expansion slows down, is this the end of the super deal? We also look at the data behind a two-tier occupational office letting market.

To view the full report, please click here.

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