Demand for Dublin office space is ‘robust’, says investment firm

Starwood has a €60.3m loan issued against the Citywest Hotel in Saggart, Co Dublin

John Mulligan

Strong demand for office space in Dublin is holding up despite lockdowns and the expectation that a significant proportion of office workers will be spending more time based at home in future, according to Starwood European Real Estate Finance.

The company has loans issued against hotel and office properties in Ireland and elsewhere in Europe.

It has a £32.1m (€35.3m) loan issued against an office portfolio in Ireland and a £54.8m (€60.3m) loan against the Citywest Hotel in Dublin.

In an update to the stock exchange, Starwood said that a number of landmark office deals were announced in recent days in London.

“We have also seen a strong market with robust pricing for new acquisitions agreed in Germany and Dublin,” it added.

“In Dublin since the lockdowns were announced, on the office leasing side there have been 52 new requirements totalling 640,000 sq ft and active requirements in Dublin are currently estimated to be 4.2m sq ft, showing robust demand for office space while supply remains muted,” Starwood told investors.

The investment firm noted that while the Covid pandemic has driven a change in working practices, with many people forced to work from home, the impact has been “vastly different” across Europe.

“For example only 34pc of office-based workers have returned to their normal work location in the UK, but in continental Europe there is a very different picture with each of Germany, Italy and Spain reporting greater than 70pc and in France it is 83pc,” said the firm.

Starwood said it’s “widely believed” that physical office space will remain important in the future, “allowing employees to collaborate, innovate and be productive”.

“Offices provide a key tool for employers to engage and attract talent and to reflect a company's brand and culture,” noted Starwood.

“We hear regular anecdotes from financial and professional services companies reporting reduced productivity as a result from working from home – including a decrease in overall per-employee capacity due to inefficiency of communication, the lack of the collaborative spark of office interactions and the reduction of interactions for new and junior employees stifling training and development,” the firm added.

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