Has the Dublin office market turned a corner?

Is Irish real estate investment group Iput calling a turn in the Dublin office market cycle?

The sector has had a rough five years, with working from home trends driven by the pandemic, lay-offs in the tech sector, and a glut of new supply.

So news that Iput has secured an equity investment of €175 million from CBRE for offices is a strong vote of confidence in the sector.

Iput said the capital raised from CBRE “represents the first step in a planned €500 million expansion” of its “prime office portfolio in Dublin’s city centre”.

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Iput intends to begin development of its 350,000sq ft city centre office pipeline, which comprises sites at Earlsfort Terrace and Harcourt Street.

Its view is that there is strong demand for energy-efficient grade A offices, with good-quality amenities, amid a lack of supply in that category.

The group has been around since 1967, delivering good dividends to investors and building a strong reputation for delivering quality product to tenants.

Its 600,000sq ft Wilton Park scheme in Dublin 2 has won much praise and numbers blue-chip companies such as LinkedIn, Stripe and EY among its occupants.

Some might argue that the market might already have turned. Workday’s lease of 416,000sq ft of offices at Marlet’s College Square development in Dublin 2 was the largest single office letting in the European market since Covid-19 lockdowns in early 2020.

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A recent report on the Dublin office market by Colliers noted that prime rents remain unchanged, ranging between €62.50 and €65 per sq ft, with some “trophy offices in the best locations” commanding higher rents.

“Of the 2 million sq ft scheduled for delivery by 2028, 70 per cent is already pre-let or reserved,” it added.

“Grade A options to facilitate larger requirements (80,000 sq ft-plus) are now hard to find so we expect to see a return to speculative office development in strategic locations in the city. Quoting rents for these new buildings will need to exceed €75-€80 per sq ft to justify the build cost.”

So Iput might be on to something. Then again, history tells us that speculative property development in Ireland rarely ends well.