State urged to review OPW office leases in light of Covid crisis

Review indicates considerable savings could be made with leases due to expire

Distillers Building in Smithfield, which the OPW pre-let last year

Distillers Building in Smithfield, which the OPW pre-let last year

 

With almost half of the Office of Public Works’ leased properties due to expire over the next five years, and an increase in remote working, the Government could make “significant savings” by looking at how much desk space is required.

This is according to a review prepared by the Department of Public Expenditure and Reform, which looks at the impact of the Covid crisis on the commercial office market and its implications for State leases.

With the Government already committed to having 20 per cent of the public service working remotely, and with more employees wishing to do so in light of the pandemic, it says there are “real opportunities” to re-examine the State’s approach to office accommodation to realise savings for the Exchequer.

Some 58 per cent of the OPW’s leased portfolio is in Dublin, where commercial rents are highest, meaning considerable savings could be achieved from having a significant number of people working remotely.

The study says that under a working from home policy covering 20 per cent of staff, in tandem with a 5 per cent reduction in rents, the potential average cost per employee a year could be reduced by 24 per cent, or nearly €1,500.

Expanding this out to 40 per cent of staff working remotely along with a more severe 10 per cent reduction in rents could save as much as €2,860 per staff member, equivalent to nearly half the sum currently paid out for desk space per individual.

Figures show €102.5 million has been allocated for State rents this year, as against €91 million last year. This year’s 12.6 per cent allocation increase was the largest provided since the rental peak in 2009, and was driven primarily by an increase in staff numbers and rising property costs.

Last year, total staff numbers in the Civil Service rose by 6.6 per cent or 2,618 people, while total leased space rose by 3 per cent or 10,000sqm.

The total office space maintained by the OPW at the end of 2019 was 887,407 sqm, consisting of 542,178 sqm owned and 345,229 sqm leased property.

The report notes that it is difficult to predict staff numbers over the coming years. However, it indicates that considering the impact of remote working is something that should be considered.

“A long-term structural change towards more flexible working practices in both the private and public sector is a distinct possibility. If policies are adapted to reflect this within the OPW estate portfolio over time, significant cost savings on rent could be negotiated and achieved for the Exchequer,” it says.

“Now is an opportune time to consider the effects of policy changes on leases as a significant proportion of Dublin leases are due for renewal over the next 5 years.”