The dramatic change in the business climate has forced many companies to review their office requirements, writes Jack Fagan.
SEVERAL MAJOR office developments planned for Dublin city now seem certain to be cancelled because of a reluctance by banks and large professional firms to relocate to more spacious headquarter buildings in the current recession.
The sudden change in the business climate - and particularly the disruption of banking and other financial markets - has forced most of the big firms to review their future office needs in the light of possible layoffs over the coming year.
The decision not to proceed now with expansion plans is likely to have an immediate knock-on effect on the construction industry, already reeling from the crash in the housing market. The slowdown is also being accentuated by the shortage of bank funding and a reluctance by most banks to finance speculative office schemes in the present difficult business climate.
Already, Bank of Ireland and AIB Capital Markets have pulled out of discussions to relocate some of their operations to the North Lotts area of the Dublin docklands. Bank of Ireland had planned to take an impressive 46,450sq m (500,000sq ft) as a back office along Mayor Street while AIB Capital Markets had been expected to sign off on a 37,160sq m (400,000sq ft) deal on the Liam Carroll-owned Brooks Thomas site.
If and when Bank of Ireland overcomes its present difficulties, it is still expected to set up a new headquarters on the site of the Burlington Hotel which is owned by developer Bernard McNamara. In the meantime, the bank has the option of extending its stay at its old HQ on Baggot Street.
Other firms which have postponed decisions on future accommodation include KPMG who were expected to look for about 37,160sq m (400,000sq ft); Deloitte Touche 16,722sq m (180,000sq ft); Arthur Cox Solicitors 18,580sq m (200,000sq ft); and the IDA 9,290sq m (100,000sq ft).
The construction industry is still hoping to agree letting terms with some of the big players in the market by offering a series of incentives which have not been available for several years.
However, there is a large volume of vacant space overhanging the market, estimated to be about 15 per cent of the overall capacity. Most lettings in recent months have been for areas of under 400sq m (4,306sq ft). Agents trying to offload some of the completed blocks are due to begin advertising more flexible letting terms early in the new year.
Rents in the north docks range from €484 to €538 per sq m (€45 to €50 per sq ft) while space on the south docks is making anything up to €592 per sq m (€55 per sq ft). Most of the attention in the docklands has been concentrated on the Spencer Dock area.
