A new report shows that tech companies are now taking-up significantly less newly available office space in Dublin than in previous periods – and that office leasing remains subdued in 2023 to date.
The data from the Quarter 2 report on key trends for 2023 from BNP Paribas Real estate showed that while office leasing in Dublin picked-up somewhat between April and June, it “remains subdued by historical standards.”
In the first half of the year, 65,853 sq m of purpose-built space has been leased since the start of the year, representing a 27% discount on the same period last year, which in itself, fell short of the long-term average, John McCartney, Director & Head Of Research with BNP Paribas Real Estate said.
The report noted that “the contraction in leased space, and deal sizes, reflects a pronounced shift in the sectoral composition of office demand” – will a marked fall off in tech firms taking up Dublin office space.
“Between 2017-2020 tech firms accounted for 53% of Dublin office take-up, incorporating over 610,000 sq m of space. However, they have only taken 123,749 sq m since the start of 2021, and this trend continued in Q2 2023 with less than 5,000 sq m let to technology operators, accounting for just 12.6% of take-up,” the report said.
BNP’s analysis said that there “are several reasons for the tech pull-back”.
Many global tech brands moved to establish large office campuses in Dublin ahead of recruitment in the pre-pandemic years, they said, citing Meta’s 81,000 sq m at Fibonacci Square, Ballsbridge in 201, and Salesforce’s 43,700 sq m at Spencer Place in 2019.
“Even in a benign macro environment, this would have dampened their business space requirements in the years that followed,” the report noted.
However, after booming during the pandemic, the global tech industry slowed sharply in 2022, triggering a worldwide spate of jobs announcements, BNP said.
While net ICT employment in Ireland only fell by 1,900 between its peak last August and May 2023, “sectoral turbulence has almost certainly resulted in Dublin having fewer tech employees today than would otherwise have been the case,” the report said.
BNP also noted that technology jobs are amenable to remote working, and research confirms that remote and hybrid strategies are most extensively used in the ICT industry.
In contrast to the residential market, it is believed that even in prime city centre locations, the market has moved in favour of tenants with lease terms reducing sharply and with landlords being forced to offer bigger rent frees relative to the reduced terms.