One of the country’s largest office developers raised concerns with the Government about the uncertainty caused by work-from-home strategies and the “significant” cost of building amenities to encourage staff back to the office.
Clancourt Group, which has been developing and managing prime office buildings in Dublin since the late 1960s, warned the Department of Finance last year that a lack of new office space posed “a potential serious threat” to foreign direct investment (FDI) in Ireland, according to documents released to The Irish Times in response to a Freedom of Information Act request.
Conor Kenny, joint chief executive of Clancourt, warned Minister for Finance Jack Chambers in October 2024 about challenges faced by developers providing office accommodation “for the many FDI companies that are the main contributors to Ireland’s corporation tax each year”.
In an email sent to the minister on October 11th – 10 days after Budget 2025 was delivered – Mr Kenny wrote that commercial real-estate (CRE) investment “faces many challenges which are hampering the provision of the next generation of this much-needed infrastructure”.
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Mr Kenny noted that much “uncertainty” has been caused by “work-from-home strategies of office occupiers” and “the significant extra costs involved in building staff amenities, to help the employer who has just leased space from us, to then get staff back to the new office”.
In recent months, Apple signed a 10-year lease with Clancourt for office space at 4 and 5 Park Place in Dublin city centre.
Clancourt has several other high-profile tenants including IDA Ireland, solicitors Arthur Cox, consultancy firms Deloitte, KPMG and EY, and Bank of America.
In his email, Mr Kenny also raised concerns about “highly inflated construction costs” which he said challenge “the viability of building new office schemes, all [of] which now need to be built to meet the highest sustainability requirements”.
He said there was “no sign of a fall in the actual cost of construction unlike after the last recession”.
Mr Kenny and a number of Clancourt colleagues, including his brother and joint chief executive Kevin Kenny, met Mr Chambers on December 5th, 2024.
The group discussed “the importance of the commercial real estate sector” and the fact it “provides vital infrastructure to support FDI coming into Ireland”, according to the minutes of the meeting.
“The attendees advised that there are a number of challenges facing the sector which are being driven by the cost and viability of projects,” the minutes note.
“They also stated that a number of the issues were equally relevant to the residential sector. The attendees advised of issues relating to the availability of new office space from 2026 onwards when factoring in the current level of development.”
According to the minutes, the attendees “spoke of the difference in tax treatment between domestic and international investors in the market”.
In his email in October, Conor Kenny noted the “lack of a level playing field” in the CRE market “particularly when comparing the tax paid by domestic compared to foreign participants”.
In a briefing note prepared in advance of the meeting in December, department officials stated that the CRE sector had “faced challenges from a combination of cyclical and structural factors over recent years”.
“Overall CRE investment fell 70 per cent in 2023 compared to 2022,” the document notes.
“The primary drivers of the decline in 2023 were concentrated in the residential and office sectors. The year to date has been broadly similar, although there were tentative signs of improving conditions in the third quarter.”
The minutes of the meeting state there was “no follow up”. The Irish Times has contacted Clancourt for comment.
