Has anyone else noticed the growing aversion to second-hand buildings in Dublin’s office market?
What started as novelty fit-outs among uber-cool, cash rich, tech companies and millennial up-starts, quickly turned into a seriously competitive game of interior one-upmanship. And this has been good for the marketplace overall. The office sector has, without question, raised its game to offer world-class, contemporary space to a new generation of businesses, with ‘space’ being the important word here.
Even if the term ‘Space as a Service’ is new to you, the concept is unlikely to be. It refers to a new way of using buildings and communal indoor and outdoor spaces to meet the day-to-day demands of modern users. It is about more than technologically smart buildings and intelligent design, occupiers today are demanding workspaces with wellbeing at the centre of the design. This trend is validated in CBRE’s most recent EMEA Occupier Survey, which confirms a dramatic shift away from the cost cutting priorities of businesses just 7/8 years ago, towards “a workplace strategy that responds to the needs of their workforce”. The three key priorities are technology, flexibility and wellness. Of course, while cost remains a consideration, it has dropped much lower down the list of priorities. Using space essentially as a service to its users is a way for businesses to reinforce their brand values and to drive the culture of their organisation. This is a big ask of traditional bricks and mortar.
And it is not just happening in offices, residential space is certainly following this trend – just think about the pricey coliving communities revolutionising how young, mobile professionals are living. New sectors are emerging across the real estate industry globally and Ireland is not immune. This opens up massive opportunities for developers and construction companies focused on the build to rent market. It makes sense to mitigate the investment/development risk by ensuring the right product, rather than trying to retrofit existing buildings that were designed for a different era and for a different generation of occupiers. But where does that leave all of our existing, relatively newly-built yet already-dated stock?
In recent years, local leasing activity has been busiest for top quality/HQ, grade A buildings with access to gyms and other facilities. As design and build teams meet this challenge head on, what will become of the older buildings that are already vacant or likely to be vacated as more desirable new stock is delivered? Sure, it will be a more affordable option but this is unlikely to be enough. What is more likely is that we will see a further sector emerge within the industry, focused solely on transforming existing stock with innovative design and accessible technologies that can be retrofit like keyless entry, indoor green spaces/biophilic features and building sensors for efficient performance and predictive maintenance. It will be interesting to watch how this plays out in other cities with similar trends, like London.
Director / Business Development
Lotus Investment Group