2021/22 Office Market Review and Outlook
In our latest Dublin Office Market Review and outlook, we examine activity in the sector over the last 12 months and look at some key predictions for 2022.
To read the full report, click here.
In our latest Dublin Office Market Review and outlook, we examine activity in the sector over the last 12 months and look at some key predictions for 2022.
To read the full report, click here.
Pan European investor and asset manager M7 Real Estate has paid just under €15 million for two office blocks in south Dublin.
Developed in the late 1980s as part of the wider Merrion Shopping Centre scheme, the Nutley and AIG buildings comprise an overall floor area of 4,016sq m (43,235sq ft) along with 83 undercroft car parking spaces. The subject property is currently generating total rental income of €1,439,932 a year.
The Nutley Building is let to a number of occupiers including Bonkers Money, the Japanese Embassy, the Austrian Embassy and Global Standards while the AIG Building is let to a single tenant with a number of sub leases in place.
While The Irish Times reported that the deal for the two offices was close to being finalised in October 2020, it is understood the proposed transaction was completed only in recent weeks. Commercial real estate consultants Bannon handled the sale.
Following its latest purchase, M7’s Irish portfolio now comprises 18 assets extending to just under 1,100,000sq ft, primarily in industrial and logistics space.
In October 2020, the company paid about €13.5 million for the long leasehold interest of five fully let units at the Sandyford Business Centre in south Dublin.
The purchase of the portfolio gave it control of five of the scheme’s 10 units along with an associated provision of 200 car parking spaces. The portfolio’s office accommodation covers a combined area of 4,532sq m (48,786sq ft) and is producing annual rental income of €1,192,578 with a weighted average unexpired lease term of 5.8 years, with breaks at 4.6 years.
In August 2020, the company paid €6.25 million for the former Kildare headquarter office and distribution facility of convenience store operator ADM Londis, while in January 2020 it acquired the Primeside Park industrial estate in Dublin for €6.75 million.
The group also controls the Century Business Park in Finglas, which it acquired for €4.47 million in September 2019, and the Westlink industrial estate in Dublin 10, which it bought for €13,870,000 in 2018.
Its first investment here came in 2017 when it bought Fumbally Lane, a combined office and residential development in Dublin 8 which was on the market for €24 million. M7 sold Fumbally Lane to BCP Asset Management in 2018 for €33.5 million, following the completion of a comprehensive asset management programme which enabled the property’s vacancy rate to plummet from 17 per cent to 2 per cent through the addition of 19 new tenants, and its annual rental income grow by €1.14 million.
M7 operates across 14 countries. It manages a portfolio of about 835 retail, office and industrial assets with a value of about €5.1 billion.
Take up for 2021 exceeded 1,700,000 sq.ft. There was a notable increase in market activity from H2, with Q4 attributing over 1,000,000 sq.ft. to the final years take up figure. This was largely boosted by 2 transactions in excess of 200,000 sq.ft. (representing 29% of total take up).
We are off to a strong start for 2022 with over 800,000 sq.ft. of accommodation currently reserved.
With works now complete, we are pleased to welcome Greenlight Reinsurance as the first occupier of #50CityQuay, the latest company to join the #WindmillQTR. With two further floors currently reserved, we have one ‘own door’ office floor available to lease (1,313sq.ft). Please contact Lucy Connolly or Ros Tierney for further information on 01 647 7900.
The Bannon office team are pleased to present a number of high quality Georgian floorplates. Located in prestigious locations in Dublin’s Central Business District, we can cater for leasing requirements from 590 sq.ft. to 2,135 sq.ft. Contact Ros Tierney or Lucy Connolly today for further information.
Some of the Bannon team inspecting Fitzwilliam 28 this week which is nearing PC. The new ESB Headquarters raises the bar for sustainable office development in Ireland. Proud to have been part of the team to bring this exciting development to fruition since 2011.
Take up for Q3 has exceeded 460,000 sq.ft. across 53 transactions. This represents a 92% increase on Q3 2020 but more importantly a 26% increase on Q3 2019 (pre covid).
This quarter has seen a significant jump in activity in the suburbs, particularly in the South Suburbs which accounted for 41% of all transactions.
As we enter Q4 there is over 1,000,000 sq.ft. reserved, this coupled with an increase in active requirements and the continuation of a phased return to the office should bode well for the office market for the remainder of the year.
The ‘Office’ has featured heavily in the press over the past 18 months and indeed in everyday conversation, as working from home became a necessity for most office-based employees. Countless articles and blogs have been published with sensationalised headlines such as “What will the office market look like after the great remote working experiment?” to “Productivity of remote workers could determine the fate of the office market”.
Our view is that the office will now assume a wider function with a more consolidated, improved, and focussed environment to manage the challenges of hybrid working and employee engagement going forward.
Over the last 6 years, Irish office developments have evolved considerably with numerous exceptional schemes being delivered. These buildings have attracted leading global firms to Dublin in particular and the expansion of many more as they continue to increase their presence and EMEA HQs. Due to the new standards set by these firms, occupier expectation has increased which has resulted in developers placing more emphasis on emulating what the tech sector has traditionally offered to their employees: amenity, a perk, a perceived life work balance. They have achieved this through the accumulation of amenity-based facilities such as: high end shower and bicycle facilities, concierge services, tenant events, better reception areas, coffee docks and townhall spaces. This together with improved building standards and environmental and sustainability credentials coming more to the fore has given rise to the creation of world class and award-winning office buildings in Ireland.
However, the office sector is about to enter a new phase. Traditionally offices required a centralised location which has been challenged by technology. Prime offices were traditionally clustered around transport infrastructure in a central business district where multiple advantages of proximity to transport, telecommunication infrastructure and labour combined to attract a premium from occupiers, but technology is challenging the need for multiple office functions to take place in a centralised location. This need must be replaced with desire. The user of the building now places more focus on it being a positive environment for their business and their teams.
Like the revolution that has taken place in the retail market where the ability to shop online challenged traditional assumptions on the functionality of real estate, investors in the office sector must adopt an experience focussed strategy. The nascent breakthroughs the sector has made recently to enhance user experience must be expanded upon, implemented at an early stage in the development process and maintained through a proactive management regime.
As real estate’s function evolves, how do we deliver a successful solution for this next phase in the evolution of the office? As mentioned previously User experience is key and this can be achieved through many innovations. These changes do not have to be seen as challenges but as opportunities to be proactive and differentiate a proposition from that of their competitors.
Through Bannon’s extensive property management portfolio and experience in working as design consultants on several large new schemes, our role in working with investors and developers on identifying and enhancing the user experience for office occupiers and their teams has come into sharp focus.
For the investor the asset cannot be just about place making or achieving optimal rental outcome. An investor must consider it as a longer-term play by exploring tenant optimisation i.e. perhaps leasing a portion of the scheme at lower rents to amenity-based occupiers to carefully coordinate a desired aspirational environment. Correct implementation of property and asset management functions is fundamental, they are key to ensuring the functionality for their occupiers from both a corporate and personnel perspective. Communication with occupiers is essential as creating positive experiences for users of the buildings will in turn lead to greater loyalty and enhanced values.
As we move closer to a return to the office in whatever form, recruitment and retention will continue to be the driving force in office acquisitions. Therefore, to adapt to a hybrid model, promote productivity and engage with the ‘new employee’, the office needs to evolve to reflect what people want to use every day. The era of passive office investment is over.
Lucy Connolly is a Divisional Director at Bannon. She has 15 years’ experience acting for a wide variety of private clients and companies in relation to commercial property, office acquisitions, sales and lettings. Contact Lucy by email on lconnolly@bannon.ie
We were delighted to hear our Executive Chairman Neil Bannon interviewed on Executive Chair, part of Newstalk’s “Down to Business” radio show on Saturday. Neil and Bobby discussed the big changes to the nature of the Office and how it will move from being functional to experiential. He provided the valuable insight that Investors and Employers are now going to be more concerned about the experience of being in the office. It will no longer simply be a place with a desk but instead somewhere you look forward to visiting in the new hybrid working world.
As a result, he mentioned that Bannon had seen a notable increase in clients seeking to have the firm leverage our market leading Retails skills and apply them to the Office. Other topics covered included how Neil’s Law degree helps with complex lease and purchase negotiations, setting up Bannon with his father Joe and how an independent, Irish owned business, excels at competing with multi-national competitors in this market.
Take a listen…..
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Email: info@bannon.ie