Tech giants and start-ups disembark at Silicon Docks and discover a Dublin populated with hoodie-clad, craft beer-drinking Millennials who speak three languages and get around on a fixie. They find a vibrant social life; a buzzing ‘techosystem’ that attracts the talent they require; a ready-made market for their own products; an agar for technological innovation. Initially attracted by our corporation tax rate and for our unique position as the only English-speaking country in the Euro-zone, they stay for our ‘inventive scrappiness’. According to Enterprise Ireland the ICT sector (Information and Communications Technology) accounts for more than €50bn of Ireland’s exports each year. The sector’s traditional players – Intel, HP, IBM, Microsoft and Apple – have been followed by the leaders of the digital revolution, including Google, Facebook, LinkedIn, Amazon, Hubspot, PayPal, eBay and most recently Twitter. Many of them have chosen a mooring in the historic dockyards area of Dublin, known as Silicon Docks. This in turn has attracted fledgling tech companies like Indeed, Zendesk, DataHug and many more.
“Ireland has made a good job of building a proto-Silicon Valley. By attracting global high-tech names to the country, it provides a high-tech hinterland in which smaller companies can grow…a whole ecosystem of support.” Ben Rooney, the Wall Street Journal Europe.
Google, for example, which employs roughly 2,500 people in Dublin, has teamed up with Trinity College to transform computer science in Irish schools. It holds public workshops in their Foundry on the science of Search, and it offers mentoring programs that connect Googlers with local SMEs.
This part of the city represents the essence of Ireland’s brand as the internet capital of Europe. Tech firms took up more than 36% of Ireland’s entire market for commercial office space during 2013, and 43% of this space is in or near Silicon Docks. The vacancy rate in the city centre (14.9%) is significantly lower than the suburbs (21.9%). Prime city centre rents at the end of 2013 stood at €35 per sq ft with quoting rents in Q1 2014 at €40 per sq ft. Although overall supply is high, a key issue is availability of prime space in core locations. 70% of vacant space is of Grade B and C quality. (Source Jones Lang LaSalle Dublin Office Market Insight 2014)
According to Colliers International, Dublin’s booming tech real estate market is close to overtaking London’s. The report, roughly in line with JLL, says that the IT sector represented 30pc of office take-up in 2013 and US tech giants alone invested more than $130bn (about €95bn) into Ireland between 2008 and 2012. The report also identified Ireland as the fastest growing country in Europe for data centre operators.
“Now Dublin is hot on the heels of London for the title of Europe’s Silicon Valley.” said Paul Finucane, director at Colliers International. “Any company now looking for more than 5,000 square metres of prime space in the areas that tech companies want (Dublin 2, Dublin 4) is finding very little available. The consensus is that we’ll see a return to speculative development,” he said. “We’re now seeing increased rents of €40 per square foot, so it makes sense to build. We’ve very little large office space left in the city centre.”
According to Savill’s, Irish commercial real estate transaction activity is forecast to top €3bn in 2014, surpassing the highest investment volume since 2006 in 2013 with 140 sales transactions worth almost €2bn. Domhnaill O’Sullivan, investment director at Savills Ireland, says: “At this point in 2014 there are approximately €750 million of transactions agreed or in legals, and an estimated pipeline of around €600 million coming to the market in the short-term. In addition a significant volume of stock is still waiting to be traded and if any of the banks currently holding large volumes of stock decide to de-leverage via large portfolio sales, we could see turnover reach record levels again by the end of the year.”
“Technological change and globalisation are the two trends that will dominate the next real estate cycle”, says Enda Luddy, Managing Director, CBRE Ireland. “…it is now vital to keep abreast of emerging trends to pre-empt how commercial real estate will be planned, designed, developed, occupied, owned and managed over the coming years and decades.”
This sounds like a clarion call to investors, landlords, architects, designers, project managers, quantity surveyors and fit out contractors. Have you joined the digital revolution? If not, get on your fixie.
