Solicitors Arthur Cox - expected to announce shortly its requirements for a new headquarters of up to 18,581sq m (200,000sq ft) - has surprised some by taking a long lease on 1,394sq m (15,000sq ft) of space on Earlsfort Terrace, writes Gretchen Friemann

Arthur Cox, one of Ireland's top law firms, has secured additional space in the city centre by agreeing to take over Dolmen Stockbroker's former building on Earlsfort Terrace.

The law firm was assigned the lease on Osbourne House, which still has around 20 years to run, in an off-market transaction that has taken some in the industry by surprise.

Within the next few weeks, Arthur Cox is expected to announce its requirements for a new, large-scale headquarters of up to 18,581sq m (200,000sq ft) - more than double the size of its existing offices.

It will rank as one of the largest single requests for office space in the city and underscores the market's strength at a time when developers are scrambling to accommodate a number of large occupiers.

Last month KPMG announced plans to move to a 22,297sq m (240,000sq ft) headquarters by 2011 and said it was looking for a total of 35,303sq m (380,000sq ft) by 2021.

While some have speculated that the accountancy firm will head to Spencer Dock, where its rivals PwC is the anchor tenant, it is understood that Arthur Cox wants to remain close to St Stephen's Green.

Currently, the law firm occupies upwards of 7,432sq m (80,000sq ft) over two separate blocks in the Earlsfort Centre, which is next door to the Conrad International Hotel and a stone's throw from Dublin's premier square. The properties are jointly owned by the Gallagher family through their investment vehicle, Cashel Fund Plc, and the Irish Property Unit Trust.

When news filtered out of Arthur Cox's decision to take over Dolmen Stockbroker's space, following the financial company's move to Garrett Kelleher's development at 75 St Stephen's Green, many industry experts assumed the law firm had agreed on a short-term lease. However, a source close to Arthur Cox described the acquisition of the long-lease as "perfectly logical" in the context of the firm's strategy to "consolidate its existing space".

He claimed that, if the company opted to move from its current premises, "it would have no problem re-assigning any of its leases", and he pointed out that the off-market deal illustrated the high demand for offices in the city centre.

Staff numbers at the practice have significantly increased over the past few years and property experts anticipate that the additional 1,394sq m (15,000sq ft) of space at Osbourne House will be used to relocate an entire department.

Rent on the 10-year-old building, which is owned by Irish Life, is thought to be around €600,000 per annum, bringing Arthur Cox's total rental outlay in central Dublin to about €3.8 million.

Although the firm's expansion plans have been widely discussed in the market for some time, industry experts agree there is no obvious site that could accommodate the company.

It is understood Arthur Cox's first preference would be to remain where it is in the Earlsfort Centre and there is a possibility in the future that the office complex could be significantly enlarged.

If that were to happen, the firm would probably retain Osbourne House, which one source described as having solved the company's "immediate space requirements".

The other much-touted option is the Ardilaun Centre on St Stephen's Green.

Eircom's former headquarters will eventually be redeveloped and could easily be increased to 18,581sq m (200,000sq ft) from 11,260sq m (121,200sq ft) if planning permission could be obtained to build over the car-park at the rear.

But any decision on the site will have to wait until an ongoing dispute over the leasehold interest on the former Eircom headquarters has been resolved.

Other potential sites include Sean Dunne's Ballsbridge office development, which was recently given a boost by Dublin City Council officials' backing of a rezoning plan for the area, as well as Liam Carroll's two landbanks in the south docks and on North Wall Quay.

However, all these above sites are most likely to also be under consideration by KPMG, whose property dealings are being handled by agent HT Meagher O'Reilly.

Arthur Cox was recently rated as one of the world's wealthiest law firms after a survey by the Lawyer magazine revealed the practice had a turnover of more than €66 million.

The report showed the average equity partner's pay package at the top five Irish firms is over €500,000.

Arthur Cox employs over 550 people. In addition to its Dublin headquarters, the practice also has offices in Belfast, London and New York.