Dublin Office Market Overview - Research, Q4 2019 Occupier Trends Investment Trends - Knight Frank
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Occupier Trends Investment Trends Market Outlook
Dublin Office
knightfrank.com/research
Market Overview
Research, Q4 2019
Headline
Subtitle
DUBLIN OFFICE MARKET OVERVIEW Q4 2019 DUBLIN OFFICE MARKET OVERVIEW Q4 2019
Label
61%
Label
11%
OVERVIEW
behind Facebook’s taking of 870,000 Amazon’s taking of 170,000 sq ft at
OCCUPIER MARKET Label
sq ft at Bankcentre in Ballsbridge29%
in Block 2 Charlemont Square, which
Summary
Occupier activity remained strong in Q4 2018. is currently under construction,
2019 with 3.3 million sq ft transacting – Intercom’s pre-letting of 113,000
Although down on 2018, 2019 saw take-up in the Source: Data source
Other important tech deals included
the third highest year on record. Deals sq ft at Cadenza, Earlsfort Terrace
Dublin office market reach its third highest level ever Facebook’s letting of 174,000 sq ft
1. Ireland was the fastest in excess of 100,000 sq ft – of which and DocuSign’s taking of 99,000 sq ft
growing economy in Europe seven transacted in 2019 – were behind at Nova Atria South in Sandyford, at 5 Hanover Quay.
for a sixth consecutive year the high level of take-up, accounting for
in 2019 52% of the total space let. This drove the
ECONOMY constraints in the office and housing TMT Medical Fig 3. Office take-up
WEST South Suburbs 45%
average deal size to 17,558State
Prof Services sq ft in 2019, Sq ft SUBURBS City Centre 30%
markets in the capital. Looking ahead to
Despite significant headwinds – representing a continued Coworking
Pharma move away FRINGE West Surburbs 9%
2. Take-up reached 3.3 million 2020, the outlook remains strong with 4,000,000 9% Fringe 8%
including heightened Brexit uncertainty 10,000-11,000 sqOther
from theFinance ft average 8% NORTH
sq ft in 2019 – the third the Central Bank of Ireland forecasting 3,500,000 SURBURBS North Surburbs 7%
– economic growth expanded by 5.5% deal size which had previously been the 7%
highest level ever GDP growth of 4.8% which will 9%
3,000,000
CITY
in 2019 according to the CSO, making norm for the market. CENTRE
underwrite further job creation, with 34% 2,500,000
30%
9%
Ireland the fastest growing economy
42,000 new roles expected. We have The growth in this deal-size category 2,000,000
3. Prime Grade-A rents in Europe for a sixth consecutive year.
seen estimates consistently out-perform 10% mega deals being signed
is due to the 1,500,000
remained unchanged in Employment in Ireland grew by 3.5% SOUTH SUBURBS
forecasts over the last number of years by tech firms in Dublin, a trend which 1,000,000
2019 at €62.50 psf in 2019 as 79,900 new jobs were created 6% 45%
and it remains to be seen whether this continued in 2019 with TMT accounting 500,000
according to the CSO – the highest level 8%
trend will continue. for 56% of take-up.
20%
The largest
5%
deal 0
this cycle, but well below the highest
4. 1.5 million sq ft of office
2005
2006
2008
2009
2010
2013
2015
2016
2018
2019
2012
2014
2011
2007
2017
of the year was LinkedIn’s pre-letting
on record of 107,200 jobs which were In terms of investor activity, subdued
space was completed in of 434,000 sq ft at Wilton Park. Upon
created way back in 1997. Employment inflation across the EU has pushed the
2019 with 2.9 million sq ft completion, LinkedIn will occupy Source: Knight Frank Research
grew across 13 of the 14 economic ECB towards a more accommodative
projected for 2020 a total of 712,000 sq ft in what will
sectors – ‘Wholesale and Retail trade’ monetary policy, pledging to hold Headline
Q2 10-Q3 10
Q4 10-Q1 11
Q2 11-Q3 11
Q4 11-Q1 12
Q2 12-Q3 12
Q4 12-Q1 13
Q2 13-Q3 13
Q4 13-Q1 14
Q2 14-Q3 14
Q4 14-Q1 15
Q2 15-Q3 15
Q4 15-Q1 16
Q2 16-Q3 16
Q4 17-Q1 18
Q2 18-Q3 18
Q4 18-Q1 19
Q2 19-Q3 19
Q4 16-Q1 17
Q2 17-Q3 17
become a City Centre campus for the
being the only exception – with growth interest rates at their present levels Subtitle
company. The second largest deal was
5. €3.0 billion worth of office highest in the ‘Information and and reactivating their asset purchase Fig 4. Take-up by locationLabel Fig 5. Prime office rents
Salesforce’s pre-letting of 430,000 sq ft
assets were sold in Dublin in Communication’ sector which expanded programme at €20 billion a month. 61% €South
per sqSuburbs
ft per annum
45%
at RGRE’s Spencer Place which will NORTH SUBURBS City Centre 30%
2019, setting a new record for by 10.7% reflecting the strength of the While a number of risks remain to WEST SUBURBS
Label €80
see the company treble its existing West Surburbs 9%
11%
investor activity tech sector. Jobs growth in Dublin stood both the domestic and global economy, 4% 3%
€70
Fringe 8%
footprint from the 150,000 sq ft it Label
at 23,700 giving it a share of 30%, the this accommodative monetary North Surburbs 7%
€60
FRINGE
currently occupies in Sandyford. 11% 29% €50
lowest this cycle and below the five-year policy will act as a support for Dublin 7%
These SURBURBS
deals represent two of the three
NORTH €40
average of 41%. This may reflect capacity office investment. SOUTH
SUBURBS CITY €30
largest deals that have ever transacted
FRINGE CENTRE
8% 15% Source: Data source
68% €20
in the Dublin office market, only
WEST €10
SUBURBS
Knight Frank view on risk 9% €0
2005
2006
2008
2009
2010
2013
2015
2016
2018
2019
2012
2014
2011
2007
2017
Fig 2. Take-up by sector
Source: Knight Frank Research Source: Knight Frank Research
The 2020 General Election saw Sinn income tax and employers' PRSI on TMT Pharma WEST South Suburbs 45%
State Coworking SUBURBS City Centre 30%
Féin emerge as a serious challenger salaries in excess of €100,000 as
Fig 1. Dublin employment Finance Other West Surburbs 9%
to the traditional duopoly of Fine well as tapering out tax credits for Professional services TOP 5 OFFICE LEASING TRANSACTIONS
800,000 Gael and Fianna Fáil. Having won those earning between €100,000-
PROPERTY TENANT SECTOR SIZE (SQ FT)
700,000 37 seats in the general election – €140,000. The party also wish
10%
600,000 meaning that it will be the second to increase the stamp duty on 3%
Two-Four Wilton Park, Dublin 2 LinkedIn TMT 434,075
largest party in the 33rd Dail – Sinn commercial property to 12.5% which 4%
500,000 56%
4%
400,000 Féin’s ascent represents a threat would hurt investment activity. Spencer Place, Dublin 1 Salesforce TMT 430,000
300,000 to the business friendly status quo. While Sinn Féin are unlikely to be in 7%
Central Bank
Sinn Féin’s manifesto contains power this time around, the onus is No.4 & No.5 Dublin Landings, Dublin 1 State 201,000
200,000 of Ireland
a number of commitments that on the big two parties to seize the
100,000 17% The Distillers Building, Dublin 7 OPW State 182,000
could make Ireland a less attractive opportunity to address issues such
0
place to do business – potentially as housing or risk Sinn Féin gaining Nova Atria South, Dublin 18 Facebook TMT 174,000
2012
2013
2014
2015
2016
2018
2019
2017
undermining office occupier demand a potentially dominant position in
Source: CSO – such as increasing employee the next election. Source: Knight Frank Research Source: Knight Frank Research
2 3
DUBLIN OFFICE MARKET OVERVIEW Q4 2019 DUBLIN OFFICE MARKET OVERVIEW Q4 2019
TOP LETTINGS, INVESTMENTS AND DEVELOPMENTS IN 2019
R
D
PE
OA
RR
UP
ULA
ET
RC
PO
RE
CI
LL
RT
HI
H
ST
RT
L
ER
AN
ET
NO
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D
UM
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MA
No.4 & No.5 Dublin Landings No.4 & No.5 Dublin Landings
DO
W
N
Date: Q1 2019 Date: Q4 2019
OR
Purchase: €204.0 million Type: Development
ST
Spencer Place
GAR
Take-up: 201,000 sq ft Developer: Oxley & Ballymore
RE
Date: Q1 2019
N HILL
CONNOLLY
ET
Rent: N/A Tenant: Central Bank of Ireland Space Delivered: 201,000 sq ft
D
STATION
INE
Take-up: 430,000 sq ft Sector: State
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UT I O
Tenant: Salesforce
STR
Sector: TMT
O’CO
EET
S TIT
EET
3 Dublin Landings
STR
NNEL
LO
Date: Q4 2019
CON
WE
S
Type: Development
ET
IEN
CH E
L STR
R
ST R
ES Developer: Oxley & Ballymore
SHERIFF ST
LL
AM
TE NE HENRY REET UPPE Space Delivered: 113,559 sq ft
RF R
PAR
EE
IEL STREET
DA
T
PHOENIX
EAST WALL ROAD
L
VE
HALL P
PARK THE
STREET
CONVENTION
SMITHFIELD CENTRE
CONYNGHAM ROAD
BLACK
Scotch House AY
N QU
QUEEN
3ARENA
Date: Q3 2019 ED E
HEUSTON
STATION
Type: Redevelopment
R GES QUAY CITY The Reflector
Developer: MF Properties GE O QUAY
Date: Q4 2019 76 Sir John 77 Sir John
VICTORIA QUAY
ARR Space Delivered: 43,000 sq ft
Rogerson's Quay Rogerson's Quay
AN Q Yield: 4.2%
USH UAY 1 SJRQ Price: €155,000,000 Date: Q4 2019 Date: Q1 2019
The Distillers Building ER’S
QUA QUAY Date: Q1 2019 Purchaser: Deka Immobilien Type: Development Yield: 4.6%
SS Date: Q1 2019 Y WOOD Type: Development Developer: TIO Price: €35,500,000
BYPA
IZOD Rent: N/A Developer: Hibernia REIT Purchaser: Patrizia
BRID E S
EL Ballast House GRAND CANAL Space Delivered: 95,308 sq ft
AP Take-up: 182,000 sq ft Space Delivered: 112,000 sq ft ENERGY THEATRE
CH Tenant: OPW Date: Q2 2019
Sector: State GTR Yield: 5.6%
TRINITY COLLEGE PEA
EE
T Price: €26,900,000 DUBLIN R SE S 5 Hanover Quay 5 Hanover Quay
THOM T
AS S Purchaser: Union Investment RE E 2 WML Date: Q3 2019 Date: Q1 2019
SOUTH CIR CULAR
TRE T
ET Date: Q1 2019 Yield: 4.1% Rent: €51.50 psf
T
Price: €197,000,000 Take-up: 98,628 sq ft
PATRICK STREE
51-54 Pearse St/ Type: Redevelopment
EET Developer: Hibernia REIT Purchaser: Union Investment Tenant: DocuSign
STR Magennis Place
ES
ET
M GRAFTON Space Delivered: 62,287 sq ft Sector: TMT
ST
JA Date: Q2 2019
N STRE
STREET
ARE
Yield: 2.9%
E
ROAD
AN
Bishop's Square
NHAM Price: €27,200,000
KILD
OLD KIL MAI EL Date: Q1 2019 GR
BO N
ROAD
Purchaser: N/A AN
DAWSO
ROW D
AR Rent: €49.50 psf
GOVERNMENT CA
M Take-up: 46,895 sq ft MO
BUILDINGS UN NA
Tenant: OPW TS LS
KEV TR TL
IN S Sector: State EE OW
TRE TL E The One Building
ET ST STEPHEN’S OW R
UPP Date: Q1 2019
Bishops Square Extension ER GREEN ER
70 St Stephen's Green Yield: N/A
Date: Q1 2019 Date: Q4 2019 Price: €49,500,000 UE
ET Type: Redevelopment CUFFE ST Rent: €61.50 psf Purchaser: BNP REIM BATH AVEN
RE The Cedar Portfolio
ST Developer: Hines Take-up: 62,000 sq ft Date: Q4 2019
ORK Space Delivered: 28,857 sq ft
C Tenant: Horizon Pharma
CE
Yield: N/A
DO
Sector: Pharma
BA
RA
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Price: €530,000,000
NO
S OU
ET
PE
GG
TH
TER
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CIR Purchaser: Blackstone
UP
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LE
CUL
AV
TR
AR AVIVA STADIUM
ST
ORT
ES
ST
EN
ROA D
IL S
NR
LO
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CAMDEN STREET
ON
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IAM
TO
UE
DO
LSF
WE
S
G
SHELB
RTH
DIN
AS
LP
ST
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HIN D
ILL
EAR
HA
BR
RO
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UM
ZW
HATCH ST
CLAN
AD REE T
WE
OURN
FIT
BER
R
Two-Four Wilton Park
LAN
Lennox Building The Lennox Building
E ROAD
Date: Q2 2019 Date: Q2 2019 Date: Q4 2019
DR
L OWE
Type: Redevelopment Yield: 4.8% Rent: N/A
CH
OA
Take-up: 434,075 sq ft
AR
Developer: Canal Basin Holdings Price: €27,000,000
D
R
LE
Space Delivered: 21,000 sq ft Purchaser: Swiss Life Tenant: LinkedIn
5 & 6 Earlsfort Terrace
M
Sector: TMT
KEY
ON
Shelbourne House One Ballsbridge
Date: Q1 2019
Date: Q4 2019 UE
T
Date: Q4 2019
ST
Type: Refurbishment
Rent: €53.75 psf
N
Yield: 3.6%
Block 2, Charlemont Square
VE
LETTINGS Developer: IPUT
Take-up: 41,473 sq ft
Price: €35,000,000
I NE A
RA
Date: Q4 2019 Space Delivered: 80,778 sq ft
INVESTMENTS Purchaser: Quanta Capital Tenant: Mongo DB
NE
Rent: €53.50 psf LE Sector: TMT
DEVELOPMENTS ES
NT
Take-up: 170,125 sq ft
LA G
Cadenza ON
Tenant: Amazon
E
DART RAIL LINE Date: Q4 2019 ST
H RO
RP
Sector: TMT UP
10 Pembroke Place
SE
LUAS TRAM LINE Rent: €60.00 psf PE
R
AD
Take-up: 112,760 sq ft Date: Q1 2019
LUAS TRAM LINE Tenant: Intercom
Charlemont Exchange Type: Redevelopment
Date: Q1 2019 Sector: TMT Developer: Pembroke Place Developments
Yield: 4.5% Space Delivered: 25,179 sq ft
Price: €144,000,000
Purchaser: Vestas Management
4 5
DUBLIN OFFICE MARKET OVERVIEW Q4 2019 DUBLIN OFFICE MARKET OVERVIEW Q4 2019
The State also performed strongly notable completions included No. of which 39% is already let, while in the Park for €1.5 billion. As a result of this The second largest deal was Blackstone’s acquisition of The Reflector from Park
comprising 17% of activity, largely due 3-5 Dublin Landings (314,559 sq ft) City Centre, 2.1 million sq ft will come purchase, UK buyers accounted for acquisition of Starwood’s Cedar Developments for €155.0 million.
to the Central Bank’s taking of 201,000 which represented the conclusion online of which 51% is pre-committed. an unprecedented 43% of the market, Portfolio for €530.0 million which was
Prime office yields finished 2019 at 4.0%,
sq ft at No.4 & No.5 Dublin Landings of the office element of Oxley and Major schemes due for delivery include ahead of European and United States comprised of six Dublin City Centre
a level they have been at since 2017. Given
– positioned behind its existing Ballymore’s Dublin Landings scheme, RGRE’s Spencer Place (430,000 sq ft), purchasers who had respective market office assets, namely The Watermarque
that Irish government ten-year yields
headquarters which it completed in while Hibernia REIT delivered 1SJRQ Aldgate’s Termini (221,523 sq ft) and shares of 19% and 18%. Henderson Park Building, 29-31 Adelaide Road, Marsh
bonds tightened from 0.89% to 0.14%
2017 – and the OPW’s pre-letting of (112,000 sq ft) and 2WML (62,287 Google’s Boland’s Quay (210,036 sq ft). have already started the disposal of House, Iveagh Court, 75 St Stephen’s
over the course of 2019 (CSO), while office
182,000 sq ft at the Distillers Building. sq ft) which completed their Windmill some of the prime core assets within Green and Parkgate Street 1 and 2.
yields remained stable, the risk premia
The majority of activity occurred in the Quarter development. the portfolio with the sale of the Capital Elsewhere, Blackstone have disposed of
City Centre which accounted for 68% INVESTMENT Collection – namely One Molesworth Nova Atria in Sandyford to Singapore of Dublin office investments widened by
of the market followed by the South Street, 2 Burlington Road, 5 Harcourt investors Mapletree for €165.0 million, three-quarters of a per cent in 2019. With
2019 established a new record for
Suburbs and the City Fringe with 15% Delivery in 2020 is Road, 30 to 33 Molesworth Street and representing a significant premium on real estate markets operating at a lag to
investment in Dublin’s office market
and 11% respectively. The vacancy rate expected to increase by Fitzwilliam Hall – with a guide price the €100.0 million that Blackstone paid bond markets, many had expected this to
with €3.0 billion transacting – well
in Dublin stood at 7.0% at the end of 88% to 2.9 million sq ft, up of €400.0 million for the entire. With for the asset in 2014. The remaining translate into more aggressive pricing in
ahead of the previous peak of €2.1
2019, falling to 5.3% in the City Centre from the 1.5 million sq ft these buildings representing some of transactions that made up the top five 2020, but the crystallisation of risks such
billion which was achieved in 2014
and as low as 1.2% in the prime core. completed in 2019 the finest office assets in Dublin, the deals were Union Investment’s purchase as the uncertain election results means
and double the five-year average of
Prime rents finished the year at pricing achieved in this sale is likely to of 5 Hanover Quay from TIO for that we are unlikely to see this scenario
€1.5 billion. As illustrated in Fig 6, €2.1
€62.50, a level they have maintained set the tone for the rest of the year. €197.0 million and Deka Immobilien’s come to fruition in 2020.
billion – or more than two-thirds of
since 2017.
In the Suburbs, Sandyford witnessed the full year volume – transacted in Q4
heightened levels of activity with alone making it the highest quarter on Fig 6. Dublin office investment volumes Fig 7. Dublin prime office yields
DEVELOPMENT 488,000 sq ft being delivered including record by some distance.
MARKET
€2,500m
Blackstone’s refurbishment of Nova 8%
The most significant transaction of
Atria South (174,000 sq ft) and Cyril €2,000m 7%
1.5 million sq ft of office space was 2019 was the sale of the Green REIT
McGuire’s development of One South 6%
delivered in 2019 – the lowest level portfolio – the value of which was
County (141,000 sq ft). €1,500m
since 2016 when 1.3 million sq ft rooted in Dublin offices, with George’s 5%
was completed. 851,000 sq ft was Looking ahead, delivery in 2020 is Quay and Central Park being the largest 4%
€1,000m
supplied in the City Centre where expected to increase to 2.9 million sq ft assets in the portfolio – to Henderson 3%
€500m 2%
1%
€0
0%
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2017
Q2 2017
Q3 2017
Q4 2017
2005
2006
2008
2009
2010
2013
2015
2016
2018
2019
2012
2014
2011
2007
2017
Source: Knight Frank Research Source: Knight Frank Research
TOP 5 OFFICE INVESTMENT TRANSACTIONS
Fig 8. Buyer and vendor source
A P P ROX .
PROPERTY SELLER BUYER
PRICE
UK US Ireland
Europe Asia
Green REIT Portfolio Green REIT Henderson Park €1.5bn
8%
Cedar Portfolio Starwood Blackstone €530.0m
3% 1%
11%
5 Hanover Quay, Dublin 2 TIO Union Investment €197.0m
31%
65% 43%
18% Nova Atria, Dublin 18 Blackstone Mapletree €165.0m
VENDORS
The Reflector, Dublin 2 Park Developments Deka Immobilien €155.0m
19%
BUYERS
Source: Knight Frank Research Source: Knight Frank Research
ISJRQ
6 7Flurry of post-election
investment deals
No respite in
supply shortage
New record
rents forecast
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0 THE GLOBAL PERSPECTIVE ON PRIME PROPERTY & INVESTMENT
Robert O’Connor, Research Analyst Paul Hanly, Director
K N I G H T F R A N K .C O M / W E A LT H R E P O R T 2020 — 14TH EDITION
The Wealth Report London Offices robert.oconnor@ie.knightfrank.com paul.hanly@ie.knightfrank.com
- 2020 Spotlight - Q4 2019
Capital Markets Jim O’Reilly, Director
jim.oreilly@ie.knightfrank.com
DUBLIN PRS
TENANT SURVEY Adrian Trueick, Director
RESEARCH
Market Dynamics | Tenant Survey Results | Analysis
adrian.trueick@ie.knightfrank.com Gavin Maguire, Associate Director
gavin.maguire@ie.knightfrank.com
Peter Flanagan, Director
peter.flanagan@ie.knightfrank.com Mark Headon, Associate Director
mark.headon@ie.knightfrank.com
Ross Fogarty, Director
Dublin PRS Tenant Active Capital 2019
Survey - Report ross.fogarty@ie.knightfrank.com
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