Irish bad bank Nama is shifting its assets at speed, signalling an optimistic future for the Emerald Isle. Against this backdrop last week, Estates Gazette held its annual Dublin Question Time with property’s finest, in the iconic Round Room of Dublin’s Mansion House.
The discussion focused on what was threatening the longevity and stability of the recovery and how these problems could be dealt with.
The debate was at times heated but there was a prevailing sense of optimism and a sense that lessons had been learned from the previous incarnation of the Celtic Tiger.
The great space debate
The issue that dominated the debate was the lack of office supply in Dublin.
John McCartney, director of research at Savills, expressed concerns about the ramifications of the shortage. “We could see explosive rental growth as we have in previous cycles,” he said.
Pat Gunne of Green REIT disagreed. “If you look at the vacancy rate in West London, which is sub 3%, that’s a real problem,” he said, “but in Dublin we are nowhere near that level. It is not time to panic yet.”
When it came to office development the panel was agreed that the pipeline was sufficient, and panel members were pleased to see more restraint.
Paul McDonnell, head of property finance at Bankof Ireland, reassured the room that the banks would not go back to lending speculatively. “That was a mistake,” he said.
Tech: too much of a good thing?
Questions were raised officially about whether the city was over-reliant on the TMT sector for occupiers.
The sector now accounts for around 40% of the occupier market, up from 20% two years ago. But, for most, the strength of the tech industry in Dublin is a positive.
Peter Collins, managing director of Kennedy Wilson, said: “What we have now is different from the early 2000s because the sector is much broader now and includes media elements, for example. This gives the market much more stability.”
Patrick Walsh, managing director of start-up accelerator Dogpatch Labs, went as far as to say the city needs more tech occupiers.
“We have a healthy pipeline of TMT occupiers,” he said, “but the introduction of a start-up commissioner can only be a plus for the city.”
The return of retail
While the office market in Dublin is back in full swing, the retail sector has yet to catch up. However, with Hines extending the Liffey Valley shopping centre, an audience member was prompted to ask whether the sector’s fortunes were about to turn around.
From Gunne’s perspective, it was still too early for investment in this area. “It is a dangerous game to play from an investor’s point of view because there are clear winners and losers,” he said.
But McCartney pointed to statistics as evidence that the sector was about to turn a corner. “Retail is overwhelmingly affected by employment. People’s security in their jobs drives retail and so the continued decline in unemployment is a very good sign.”
An occupier’s own words
Verbal blows were traded at the debate over the availability of office space, with Gunne in one corner and John O’Keeffe, vice-president of expanding tech company Nitro, in the other. O’Keeffe spoke to EG afterwards and explained the obstacles impeding the company’s expansion plans.
“When we started here in January 2014 we just had three people then and now we are at 40, with the intention of growing to 150-200 in the next two years. Consequently, we are looking for 20,000 sq ft space to expand into, but with the supply of office and commercial space in Dublin so low, it has been very hard finding somewhere appropriate.
“We are quite specific in what we are looking for but there are also constraints due to planning problems and macro issues with demand outweighing the supply as a consequence of the growth of the economy.”
He said that he felt the lack of supply could have a big impact on the Irish economy.
“We are looking for space for 200 people and if we can’t accommodate those people because we can’t find space, that will hinder our growth projections,” added O’Keeffe. “It is becoming more critical
as time moves on.
“If space isn’t made available in Dublin it will be very limiting on what companies can develop and how quickly they can do so.”
