A total of 202 new offices - providing 12 million square foot of space - are planned for Dublin by 2021, according to the "Skyline Survey" by property advisors Savills. However it expects less than half of that to be delivered partly due to tighter lending policies and regulations at banks. This has reduced the amount of funding available and has focused development on private equity and REIT-backed projects.
Roland O'Connell, chairman of Savills, said the massive slippage between what is planned and what is likely to be built is actually a feature of all development cycles and is quite common. Mr O'Connell said the slippage in the current market is mainly down to the fact that some developers can not get finance and so the well financed developers are the ones that get on site and start building. This in turn results in more competition for the less financed developer.
The Savills chairman said there is always a level of concern that the market may get overheated at any stage when people are lending money or putting money into development and they want to know that demand is there into the future. But he said the strong growth in employment has resulted in strong demand for office space. "Luckily we have had enough office space coming on stream to meet that demand," he said.
Over 50% of the offices currently being constructed are bespoke and they have already either been pre-let or in legals and the level of demand still within the market is very strong, according to the estate agents. Savills do not see overdevelopment happening in the short term, but inevitably due to the way markets work and the cycles seen within these markets, there will be an oversupply at some stage, he added.
On Brexit, Mr O'Connell said that rather than being an avalanche of demand overnight the decision by the UK to leave the European Union would result in "gradual" demand for Dublin office space. He said that a lot of companies have investigated coming to Ireland but are "sitting on their hands" until they see what type of Brexit actually develops. "We expect that once Brexit is finalised that - over a period of years - you will see a gradual transition of jobs from the UK and certainly some of them will come to Ireland," he added.
Outside of Dublin, Mr O'Connell said that Cork is a "really exciting market" at the moment. At the start of the development cycle there, 1 Albert Quay was completed by John Cleary developments fully-let. While there was a bit of gap since then, a number of schemes are on track in Cork city centre with 75% of the planned construction already spoken for. There is also a major development in Limerick city which is nearing completion. But Galway is one area which is lacking new office development, despite demand in the city, the Savills chairman stated.
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*** Virgin Media Ireland is to acquire Waterford operator Casey Cablevision for an undisclosed sum. Casey was established in 1979 and provides TV, broadband and phone services to 2,000 people in and around Dungarvan.