Why US firms are moving to Ireland
When former US president Bill Clinton told American executives that they’d be “nuts” not to invest in Ireland, many were already ahead of him.
US companies were behind almost 40 per cent of offices bought or leased in Dublin last year and the trend is likely to accelerate this year.
PayPal, which already employs about 1,500 people in Blanchardstown, west Dublin, is today expected to announce plans to create 1,000 extra jobs at a new facility in Dundalk, Co Louth.
Other internet firms including Google and Yelp are currently looking for additional space in Dublin, as are Salesforce.com, Bank of New York Mellon and Citigroup, according to people with knowledge of the searches.
Facebook is also seeking to more than double the size of its European headquarters in Dublin, according to informed sources.
The financial crisis that caused Ireland to seek the EU-IMF bailout in 2010 drove down commercial property rents as well as labour costs and sparked new government initiatives to attract investment. US companies leased or bought about nine times more space in Dublin last year than they did in 2007, according to data from CBRE.
US companies were involved in 38 per cent of the office purchases or leases in Dublin last year, up from 22.8 per cent in 2007, according to the CBRE data.
The absorption of existing office space means more US companies will probably need new facilities for them.
Since the financial collapse, the Government has been promoting the country’s affordability and its links to the US as it tries to create 100,000 jobs by 2016 and reduce unemployment of 14.2 per cent. Commercial property in Ireland is “a steal,” Mr Clinton told a forum of investors including private- equity executives earlier this month
Ireland was the fifth most expensive location in the world for office accommodation in 2007, today it is 45th.
The corporate tax rate is a vital part of the attraction for US companies. So is transfer pricing, which involves the allocation of income between units in different countries to avoid taxes.
Most of the companies opening in Dublin “put a toe in the water to see what it’s like, see it’s easy to get good staff and then start expanding,” said Fidelma Healy, chief operating officer at e-commerce company Gilt Groupe (Ireland). The company has about 70 employees in Ireland, 20 of them in Dublin, after it opened there last year.
MasterCard will add 130 employees in Dublin over the next four years and expand into new offices, the company said last week, without disclosing a new location.
Yelp, a social-networking and local-search company based in San Francisco, is also among the companies seeking to add space in Dublin, Jones Lang LaSalle said in a January report.
Google, based in Mountain View, California, has 2,200 employees in Dublin. More than 3,000 will eventually be employed in its European headquarters there, according to a filing by the company’s Irish unit. The company is close to leasing 32,000 square feet of office space at East Point business park..
Another Mountain View-based company, LinkedIn, leased space in 2011 and has increased the number of employees to about 175 from 30 since last year.
Facebook is seeking to more than double the size of its European headquarters in Dublin ahead of its $5 billion initial public offering and is considering leasing the former Bank of Ireland headquarters building. More than 350 people work at its Dublin office, set up in 2008.
Financial-services and information-technology companies are expressing an interest in expanding, said Paddy Conlon, a CBRE director who advises multinationals seeking to set up or enlarge operations in Ireland.
“A number of pharmaceutical companies are also looking to expand into Ireland” and others are considering moving their headquarters there, he said.
Salesforce is looking to rent office space in south Dublin and Citigroup’s Citibank is weighing renting office space near the city centre, according to people familiar with the matter.
The IDA is already looking for the next wave of companies that will open in Ireland, Mr O’Leary said.
The organisation keeps a list of companies run by former Google employees it encounters to identify future expansion candidates. The rapid growth of companies like Facebook, Zynga and Twitter led the IDA to set up a new unit in 2010 targeting companies with less than $30 million a year in revenue. Thirty five of them have since set up in Ireland, he said.
“We’ve already got the top 10 companies born of the internet,” said Mr O’Leary. “We ain’t gonna stop at that.”