More than 4 million square feet of office space were under construction in Dublin from December 2016 to November 2017, according to a survey by Deloitte.
The professional services and consulting firm has previously undertaken similar surveys in other European cities across, but this is the first time it has carried one out in the Irish capital. As well as looking back over the recent 12-month period, Deloitte’s Dublin Crane Survey provides analysis and commentary on what the following 12 months could bring.
Another key finding is that more than 3,634 residential units were under construction in the period under review. Work was also proceeding in the same timespan on 13 major student accommodation schemes, which will deliver more than 4,500 beds when completed. The document also reports that 929 hotel rooms were developed between December 2016 and November 2017.
“Overall, 2017 saw a busy year in construction, with some progress being made on the residential side and the emergence of a build-to-rent market,” observed Michael Flynn, Deloitte’s real estate and infrastructure national leader.
“It’s clear that the north and south docklands are the epicentre for development activity in the commercial space, that there is strong development in student accommodation, which is projected to continue into 2018, and that Brexit effects remain subdued as hotels and the commercial office market have yet to be impacted fully.”
Brexit demands
While current and planned commercial developments should be sufficient to satisfy potential Brexit demands, Flynn added, “it is clear that the residential supply issue needs to be solved in order that Dublin remains attractive for target companies.”
In Dublin city centre, office development has been the most active market segment. According to the Deloitte count, there are 29 major developments under way, which will eventually deliver 4.026m sq ft of new office space when complete.
Taking an overview, the survey comments: “The pipeline for new office space remains strong. Some of Dublin’s biggest-ever office schemes are now under construction, including Capital Docks, Boland’s Mill and the Landings. The office market is bolstered by strong fundamentals (strong economic growth, low unemployment, low interest rates, low inflation) in the underlying Irish economy and the outlook is positive for 2018.
“Since the UK voted to leave the EU in June 2016, there has been much speculation as to the likelihood of international firms relocating to Dublin in order to maintain the passporting rights required to sell services into Europe. A large uptake in office property was expected . . . For the most part this has yet to materialise in a meaningful manner as companies have delayed announcing any major relocations due to uncertainty over the true impact of Brexit.”
On the issue of residential development, the document states: “Ultimately, the increase in the supply of housing needs to be maintained in order to ensure that Dublin city remains an attractive destination for new business investment. This is particularly relevant as the impact of Brexit continues and UK-based companies consider future EU location needs.”
Conveniently placed
On activity in the student housing sector, the survey states that most developments are focused within Dublin city centre, “and despite some being more conveniently placed to serve certain institutions”, all are within commuting distance from any of Dublin third level institutions.
“Recent activity also marks a changing dynamic in the student accommodation market. Student accommodation has traditionally been provided by third-level institutions, with 65 per cent of developments built by the institutions themselves. Current activity demonstrates the increased appetite among the private sector in the student housing market.
“The outlook going forward is positive. After a prolonged shortage, the market is responding and attempting to bridge supply. This is a task made difficult by the growing number of students entering third level education. Ireland has a young and fast growing population with increasingly high progression rates from secondary into third level education.”
On the hotel sector, the survey comments: “Given the ongoing demand, it appears that the hotel sector will continue to increase capacity in the medium term. Strong occupancy levels coupled with increasing average room rates should ensure the economics of these new hotels stand.”
