Like an unexpectedly brisk wind in the middle of a heatwave, the news that TikTok has pulled out of talks to rent 16,443sq m (177,000sq ft) of space at a prime office scheme in Dublin’s docklands may send shivers down a few spines.
On its own, the company’s decision perhaps doesn’t seem that significant. For one, the Chinese-headquartered social media platform, which surpassed the one billion user landmark last year, is still ploughing ahead with plans to add 1,000 Irish jobs this year.
To accommodate these new hires, the company said it would still proceed with its move to Mapletree’s 19,509sq m (210,000sq ft) Sorting Office building in Dublin’s docklands after signing the lease last year. Having agreed the heads of terms of an agreement, TikTok is also expected to ink a deal to rent 7,432sq m (80,000sq ft) available at Iput’s Tropical Fruit Warehouse in Dublin’s south docklands.
Needless to say, “steady as she goes” was the message from the company this week. This is despite the fact that it announced a global restructuring plan last month, which tech news magazine Wired reported would include job losses in Europe, the US and the UK.
Regardless of cheery commentary about supply and demand dynamics in the Dublin office market from some quarters, it is impossible to separate TikTok’s decision this week to back out of negotiations with developer Pat Crean’s Marlet Property Group from other recent announcements by tech companies. Amid a global slowdown that has rocked even the biggest players this year, a slew of major Irish employers have announced plans to pull back on plans to increase their footprint or are looking to downsize altogether.
First it was Facebook, which has paused the fit-out of part of its new Dublin headquarters at Johnny Ronan’s Fibonacci Square development in Ballsbridge. Then it was Twitter, which announced plans to pare back its Cumberland Street bolt-hole, moving its operations into the first three floors and looking for a new tenant for the fourth in a bid to reduce costs.
Some commercial property experts are already bracing for “a year of two halves” in the Dublin market, as Cushman & Wakefield put it in a report last month. Led by tech sector employers, record-breaking levels of investment in the first six months of 2020 saw the net Dublin office vacancy rate plunge to 5.9 per cent, down from pandemic highs of 7.5 per cent, July data from the real estate services company indicated.
But the very real possibility of a broad-based global economic downturn in the post this winter as borrowing costs begin to tilt upwards may transform a market that is still struggling to really understand what working life in the capital actually looks like post pandemic.
It is far too early to say what the rest of the year will look like. But the notion that the market can maintain first-half levels of momentum in the back half of 2022 just do not pass the smell test at the moment.