At a Glance: Office Market Q2 2020

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Lucy Connolly – Divisional Director – “The anticipated impact of covid-19 on the Dublin office market translated to a take up figure of 75,000 sq.ft. this quarter. We do expect to see a busier Q3 with over 700,000 sq.ft. of accommodation reserved, with some large transactions close to completing in the coming weeks. We commenced the quarter on a positive note with the recent announcement that Gilead are to create 140 new jobs following their letting of over 30,000 sq.ft. at North Dock”.

Hibernia REIT lets remaining space in 2WML building

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Hibernia REIT has let the remaining space in its 2WML building to online fashion platform Zalando Ireland.

The 47,500 sq.ft has been rented on a 15-year lease, with term certain of seven years, at initial rent of €2.9 million per annum – almost €60 per square foot.

The building is now let to Zalando, Udemy and gym firm Perpetua, at a contracted rent of €3.9 million per annum.

The news follows Hibernia Reit’s statement earlier this month that negotiations over leases on the majority of its vacant office space were “advanced” following an active fourth quarter in the Dublin office market.

“Following this letting the Quarter’s circa 400,000 sq.ft of office accommodation is fully occupied, marking the completion of a six-year programme to transform the Windmill Lane area in Dublin’s South Docks and the creation of our first cluster of office buildings,” said Justin Dowling, Hibernia’s director of property.

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Hibernia REIT upbeat on Dublin office market

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Hibernia REIT has made two acquisitions in recent months as it bought assets next to properties it already owns.

In a trading update covering the period from October to today, the commercial property firm said it spent €2.5m on the two acquisitions.

Hibernia REIT also said it was in negotiations with tenants to take 56,000 square foot of space in its redeveloped property on Cumberland Place in Dublin city centre.

In today’s trading update, Hibernia said the Dublin office letting market saw another highly active fourth quarter, following two relatively quiet quarters.

It noted that take-up exceeded 3.3 million square feet in 2019 as a whole.

While this was lower than 2018, when a record 3.9 million square feet was leased, a number of deals were outstanding at the end of the year, with over 1.3 million square feet of space reserved.

“In addition, active demand at year end stood at 3.8 million square feet, which should be supportive for the occupational market in 2020,” Hibernia REIT said.

Hibernia said the vacancy rate in its in-place office portfolio remains at 12% and is mainly across its 2WML, Central Quay and the Forum developments.

It said it has made good progress in lease negotiations for the majority of the space available, adding that it expects these to start concluding shortly.

Kevin Nowlan, chief executive of Hibernia, said that the Dublin office letting market ended 2019 strongly, with a pick-up in demand from tenants of all sizes, after a quieter period in the middle of the year, particularly for smaller occupiers.

“Levels of active tenant demand remain high and 2020 has started positively,” he said.

“Property investment market volumes set a new record in 2019 though it remains to be seen how the market reacts to the tax changes introduced in the recent Budget,” he added.

Mr Nowlan said Hibernia REIT had made good progress with the lease negotiations that are ongoing over much of the available space in the office portfolio.

“We continue to work on advancing our development pipeline and have made two small property acquisitions to enhance the future value of the assets we already own,” he said.

“Hibernia remains well-positioned with an extensive development pipeline, low financial leverage and a talented team,” he concluded.

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How To Achieve The Connectivity That Today’s Tenants Need

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Connectivity is firmly established as a necessary utility for office tenants. However, there are still many office locations that don’t deliver the connectivity that businesses require. A Bisnow survey carried out in September found that 69% of businesses had moved location to improve connectivity, while 41% of respondents said poor quality connectivity hindered them from doing their job properly on a weekly basis.

The savviest landlords and developers are therefore using all available technologies to achieve high connectivity. Dublin Airport Central has taken IT infrastructure seriously from the first stages of development, and the scheme has now achieved WiredScore Platinum certification.

“Today, fast internet is the most important factor for specific companies searching for office space who see their IT infrastructure as more important than the physical building they occupy,” DAC Head of Sales and Marketing Paul Byrne said. “Until now there has been very little information available to tenants about the quality of internet connectivity in office spaces. Wired Certification provides that transparency and access to information for tenants.”

What Good Connectivity Means

WiredScore has quickly become a recognised benchmark for a landlord to demonstrate a property’s level of connectivity. To achieve Platinum certification, the development must demonstrate an extremely high quality of infrastructure, as well as factors such as good communication with fibre providers, in-building mobile planning and free WiFi in common areas.

All these elements come together to provide a high level of experience for those who use the building. They come at a cost to the developer, of course, but the return will be an increased level of tenant interest. Businesses will increasingly turn away from offices that don’t meet their connectivity requirements.

Additional concerns for a landlord or property owner are IT security and reliability. Business operations are now so dependent on the internet that tenants need to be assured that they can stay online at all costs.

“At DAC we have installed multiple diverse routes underground that deliver fibre optic connectivity to the IT hub in each building,” Byrne said. “In addition, there are several different IT routes into the overall campus for further security. Being an airport city, IT security is one of, if not the, most important requirements we deliver for our customers.”

To ensure reliability, developments are increasingly including back-up generators to supply emergency power if needed. DAC has taken this further by providing space within the buildings’ plant areas for tenants to install their own private generators.

Future Proofing

It’s not enough for a business to improve connectivity for today’s technology, however. The speed of improvements to both wireless and mobile connectivity and what can be done with technology mean that an office provider must keep one eye on the future. “We have invested and we continue to invest very significant capital into future proofing our campus,” Byrne said. “In a rapidly evolving digital economy, technology is increasingly central to operations. Fast and reliable connectivity is the lifeblood of any modern business.”

An example of DAC’s investment in future proofing is the inclusion of a distributed antenna system to effectively provide high-speed wireless coverage across the campus buildings. This means that when 5G is rolled out, for example, high mobile connectivity should be available.

“Being an airport city, physical connectivity has always been one of our main unique selling points in terms of attracting companies here,” Byrne said. “However, in respect of the actual building and services, achieving world class IT infrastructure was a goal for us from the very beginning as we have always recognised that business continues to evolve at a rate of knots and we must stay up with the pace. For perspective, the iPhone only turned 12 this year, it still isn’t even a teenager. Where will the world be in a decade?”

We are already getting glimpses of how 5G, artificial intelligence and the Internet of Things will change the way we operate. To ensure businesses can make the most of new technology when it arrives, a landlord must lay the IT foundations today.

This feature was produced by Bisnow Branded Content in collaboration with Dublin Airport Central.

Slack lease the lure as ESB seeks €168m for Fitzwilliam 28

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The combination of Dublin’s status as a location to deploy international capital and its standing as the city favoured by global tech giants for their European headquarters is expected to spur significant interest from European and international investors in the sale of Fitzwilliam 28.

Located on Fitzwilliam Street and at the heart of the traditional central business district in Dublin 2, the building, which has just been leased in its entirety to workplace collaboration tech giant Slack Technologies, is being offered to the market by joint agents Savills Ireland and Bannon at a guide price of €168 million.

Fitzwilliam 28 is one of two adjoining but independent blocks both being developed by Ireland’s largest utilities company, the ESB. The sister block to 28, Fitzwilliam 27 will be owner-occupied by the ESB.

Upon completion in the second quarter of this year, Fitzwilliam 28 will comprise 12,599.2 sq.m (135,617 sq.ft) of prime grade-A accommodation over eight floors with 50 car-parking spaces.

Slack Technologies have taken a new long-term lease of the entire building from practical completion. The rent roll will be in excess of €7.7 million per annum, reflecting an initial yield of about 4.2 per cent. Colliers International represented Slack Inc in the recent letting, while Savills Ireland and Bannon represented the landlord.

Slack’s decision to rent all 135,617 sq.ft of space at Fitzwilliam 28 will give it the capacity to add as many as 1,100 jobs in Dublin. The company currently employs about 180 people at its existing European headquarter operations at One Park Place on nearby Hatch Street.

In terms of specification, Fitzwilliam 28 will feature extensive landscaping and sunken gardens, a double-height reception with marble walls and natural stone floored area leading to a centralised core offering the occupier maximum flexibility. The A3 BER-rated building will also feature more than 1,759 sq.m (18,933 sq.ft) of rooftop, courtyard and terrace gardens, providing extensive views of Dublin, in particular Merrion Square.

The building is designed by internationally acclaimed Grafton Architects and O’Mahony Pike Architects. PJ Hegarty & Sons, who are the leading design and build contractors in Ireland, are the contractors. They have a strong track record of developing high-profile offices. Recent experience includes No 10 Molesworth Street, AIB’s new corporate headquarters, and No 40 Molesworth Street, Jet. com’s headquarters.

Prime location

The Fitzwilliam scheme enjoys a prime location within close proximity to Government Buildings, the traditional retail core of Grafton Street and St Stephen’s Green and the city’s south docklands. The immediate area is well serviced by Dublin’s public transport network with both the Luas and Dart, and numerous Dublin Bus routes located within a short walk.

Fergus O’Farrell, director of investment at Savills Ireland, says: “Interest remains strong in the office sector. Dublin’s strong occupier market and economy, coupled with the quality of this asset and its central business district location, will attract interest from global investors.”

Rod Nowlan, investment director at Bannon adds: “As proven by recent lettings to the likes of LinkedIn, Twitter and Stripe, modern offices of scale situated in the traditional city core represent the focus of the current and likely future wave of occupiers. This reflects an increased emphasis by companies on “employee experience”, and there are few modern buildings that can deliver on this aspiration more than Fitzwilliam 28.

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At a Glance: Office Market 2019 in Review

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With 3 transactions in excess of 100,000 sq. ft. take-up reached an impressive 1.2m sq. ft. in Q4. This brings the year-end total to 3.29m sq. ft. across 204 transactions. Full report to follow.

Northbrook Road offices for rent at €45 per sq.ft

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Companies priced out of Dublin’s core central business district and the prime postal code areas of Dublin 2 and Dublin 4 will be interested in the opportunity to locate at 6 Northbrook Road.

Situated within a five-minute walk of Leeson Street and Ranelagh Road, this Victorian property has been thoroughly refurbished to provide more than 9,400 sq.ft of office accommodation over four floors at a competitive €45 per square foot.

Quite apart from the immediate cost benefit available to the prospective occupier, 6 Northbrook Road offers the benefit of modern open-plan and cellular office accommodation complemented by numerous of the building’s original Victorian features, including stained-glass windows and an impressive central staircase.

In terms of its facilities, the property’s specification includes: Cat 5E cabling, generous floor-to-ceiling heights throughout, recessed spot and ornate feature lighting, gas-fired central heating, floor boxes and part perimeter trunking, tea stations, solid timber flooring in part, shower rooms, an eight-person passenger lift and ladies’ and gents’ toilet facilities on all levels.

Externally, the building features a landscaped set-down area, a communal summer garden to the rear, 11 car-parking spaces and bike storage.

The property is well connected in terms of public transport. Charlemont Luas stop is just 450m away while the quality bus corridor on nearby Leeson Street Upper is served by 10 Dublin Bus routes. The surrounding area offers numerous amenities including restaurants, cafes and bars such as the Sussex, Canal Bank Cafe, Dillingers, the Butcher Grill, Bunsen, and Cinnamon.

Rebecca Jones, who is handling the letting on behalf of Bannon, says she expects to see “significant interest” from occupiers looking for a location for their headquarters within close proximity to Dublin’s central business district.

Contact our Office Department today for more information on 01 6477900

View PDF Brochure

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At a Glance: Dublin Office Market Q1 2019

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South docklands office block makes €6.9m profit in 14 months

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Hibernia Reit has sold a south docklands office block for €6.9 million more than it paid for it 14 months ago.

The sale, in which Bannon acted for the vendor and Knight Frank for the purchaser, is to a German pension fund which has secured an initial yield of 4.65%. This off-market transaction underlines the considerable weight of international capital competing for exposure to the Dublin market.

Hibernia bought the mid-sized office building at 77 Sir John Rogerson’s Quay last February for €28.7 million.

Its sale for €35.6 million, after deducting €200,000 on improvement works, marks a 24% rise in value.

After buying the building, Hibernia quickly agreed to let it to Regus on a 25-year lease from mid-2018 at an initial rent of €1.8 million and a nine-month, rent-free period. This letting was also handled by Bannon.

 

Built in 2004

The six-storey building was built in 2004 and includes 3,196 sq.m (34,400 sq.ft) of office space and 20 basement car-parking spaces. Individual floor plates extend to 540 sq.m (4,812 sq.ft).

Prior to its sale last year, it had been used as serviced offices by Fitzwilliam Properties since 2006. A number of high-profile foreign direct investment companies – including LinkedIn, PTC Bio, Indeed, Zendesk and Future Finance – got their first taste of the south docklands through short-term rental arrangements at No 77.

The area around the building is one of the most vibrant hubs in the docklands, with the tenant line-up including Accenture, Airbnb, BOI, Facebook, Google, State Street, TripAdvisor, Matheson, LogMein and BNY Mellon.

It will be interesting to see if the sale of 77 will renew interest in the nearby Reflector office block on Hanover Quay which went on the market in February through Savills and CBRE with a guide price of €155 million.

This prime block is probably the standout Dublin asset on the market at the moment. It will produce an annual rent roll of about €7 million and, given its asking price, would suggest a net initial yield of 4.2%.

No 77 is within 10 minutes’ walk of Luas and Dart services and is close to the Bord Gáis Energy Theatre and the 3 Arena.

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Kellogg to relocate European HQ to Dublin Airport Central

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Dublin Airport Central, a major new office development in the heart of the airport campus, has landed a high-profile anchor tenant for the first of two headquarter-style buildings now under construction.

US multinational food company Kellogg is to relocate its 220 Irish and European office staff to Three Dublin Airport Central, where the six-storey block will be located close to Terminal 2.

Kellogg will take 3,600 sq.m (38,750 sq.ft) of the 8,500 sq.m (91,494 sq.ft) in the first block at a rent of €363 per sq.m (€33.75/sq.ft). Car parking spaces will cost an additional €1,750 per space.

Kellogg is currently based at Airside Business Park on the outskirts of Swords and expects to begin the fit-out of its new headquarters by the second quarter of 2019. The company will have the use of 2½ floors and around 65 car-parking spaces in the block, which is being built to international standards.

Construction is also well advanced on a second block, Two Dublin Airport Central, which will extend to about 11,500 sq.m (123,786 sq.ft).

The Dublin Airport Authority has planning permission for four corporate buildings, with 41,700 sq.m (448,854 sq.ft) of offices and associated facilities. DAA chief executive Dalton Philips said he was delighted to have secured Kellogg as the first tenant.

“We can’t wait to welcome Kellogg and its employees to their new home. Ireland is well recognised as a world-class location for business and Dublin Airport Central can accommodate the requirements of major multinationals such as Kellogg and also Irish firms seeking a modern, flexible location with unmatched connectivity.”

The two office buildings under way are the first newly constructed blocks at the airport and follow the redevelopment of the 1960s former Aer Lingus headquarters, which is now known as One Dublin Airport Central and accommodates about 500 ESB international staff.

With construction of the two new office building well under way there has been “very strong interest in Dublin Airport Central from a range of potential tenants,” according to Brian Coppinger, head of Dublin Airport Central.

He said the business park appealed to internationally-focused firms due to its unrivalled location, the high quality of the buildings, the amenities available on site and the flexibility for future growth.

The Dublin Airport campus is home to more than 200 businesses, which together employ more than 19,000 people. It has more than 30 restaurants and cafes, a range of retail outlets, and leisure facilities including a gym and swimming pool.

Last year Dublin Airport handled 30 million passengers and so far this year the numbers are 6% higher.

Handling the letting along with agent Bannon is BNP Paribas Real Estate. Cushman & Wakefield acted for Kellogg.

View Letting Brochure (PDF)

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Society of Chartered Surveyors - SCSI Ireland

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