Deutsche Bank for Eastpoint
German banking giant to lease large office block with over 10,200sq m (110,000sq ft)
Pinnacle 2, Eastpoint: high volume of space involved and the strength of the covenant allowed Deutsche Bank to secure a competitive rent
The Dublin office market is about to get a major shot in the arm with the decision by Deutsche Bank to lease a substantial new office block at Eastpoint in the north city docklands.
The German bank is planning to employ between 700 and 1,000 staff – most of them new recruits – over the next few years in its greatly expanded global banking services.
Deutsche’s decision to opt for a newly developed block – Pinnacle 2 – in Eastpoint reflects its mandate to opt for economy class office space in an area much favoured by many other financial and IT companies.
The bank is likely to have negotiated a rent of slightly over €161 per sq m (€15 per sq ft) – about half the going rate for prime space in the city – for the seven-storey block which extends to 10,219sq m (110,000sq ft) and was developed on a joint venture basis four years ago by Earlsfort Developments and Dublin Port Company. The letting agreement may also include a rent-free period.
Although lease terms for new buildings in the city are gradually turning back in favour of landlords because of diminishing supply, Deutsche Bank has obviously been able to broker a favourable deal because of the high volume of space involved and the strength of the covenant.
Joint letting agents Jones Lang LaSalle and HWBC refused to comment on the Eastpoint deal. Deutsche and the joint developers also declined to confirm that letting terms had been agreed.
However, it is known that Deutsche plans to greatly expand the global business and transaction services which are already operating in Dublin. The bank employs 310 people across two offices in the city and has made it known that it plans to expand its Dublin operation because of the availability of a pool of highly skilled personnel.
Deutsche’s decision to opt for Eastpoint will be seen as an important endorsement for the business park which already accommodates about 50 firms including Yahoo, Cisco, Oracle, Citrix, UPC, Whirlpool and the Enterprise Ireland headquarters.
The Deutsche letting is one of the largest in Dublin this year when only three deals exceeded 929sq m (10,000sq ft). There has been a marked slowdown in new office lettings in the past three months, though with over 65,000sq m (700,000sq ft) of space already reserved for later this year, overall lettings for 2013 seem likely to end up around the same level as in 2012.
Lisney has estimated that about 16 per cent of the office space available in the city is “functionally obsolete”.
The agency says the problem is more pronounced in the city centre because almost one-third of the building stock dates from before 1990. No one expects the redundant buildings to be redeveloped until rents exceed €322 per sq m (€30 per sq ft). That could take up to two years because of the number of companies opting for cheap suburban rents in these challenging times.