Brexit: Thinking about Real Estate

PRACTICE AREA GROUP:
Commercial Real Estate

Many UK based businesses are on the hunt for another EU location within which to expand operations post-Brexit.  Ireland, the UK’s nearest EU27 neighbour, with a similar business culture and legal system, is a natural choice.  However, in “fake news” it has been reported by other competing European destinations that Dublin does not have the physical infrastructure in place to absorb the host of companies looking to Ireland.

Is Ireland open for business?

In truth, the Irish Government and public and private sector Ireland have been preparing to welcome relocating businesses for quite some time.  Substantial commercial and residential development has been under way for over 18 months, after a fallow five years for construction, and a number of Government initiatives are delivering on increased investment in housing, education, roads and other infrastructure.

Office space

Research by CBRE Ireland confirms that, out of a total Dublin office market of 3.7 million square metres (in excess of 60% of which is in the city centre), there are more than 360,000 square metres currently under construction across 27 different developments with delivery dates in 2017 and 2018. This pipeline of 10% of total stock puts Dublin well ahead of the pipelines of Frankfurt, Brussels, Paris or Amsterdam.  In terms of existing space, at the beginning of this year there were 250,000 square metres of office space available to let, which is 1.37 times the average annual take up in Dublin. Planning permission has been secured for a further 543,000 square metres of space across 48 new schemes and another 48,323 square metres are in the planning process at present.

With Ireland being the only other native English speaking and common law jurisdiction in the EU, businesses arriving to Dublin from London will find our office leases similar to those they are used to in London city.  New Irish leases have the added benefit of no "ratchet style" upward only rent reviews, which have been banned here by statute in favour of market fluctuating reviews.

Housing

In July 2016 the Irish Government launched its housing plan “Rebuilding Ireland”, pledging to double the output of housing from the current levels to at least 25,000 units per annum by 2020. The Government allocated €200 million to the Local Infrastructure Housing Activation Fund (LIHAF) to provide enabling infrastructure on key sites to open up lands for early development.  In addition, changes have been made to the planning code to expedite delivery of housing.  Separately, the Strategic Development Zones (SDZs) in Dublin Docklands, the Poolbeg Peninsuala (Dublin city) and Cherrywood (south County Dublin) provide for fast-track planning for 2,600, 3,000 and 7,700 residential units respectively.

Infrastructure

€10 billion has been allocated from the Capital Investment Plan 2016-2021 to the Department of Transport to complete the 16.5km metro link between Dublin Airport and the city centre, as well as extensions to the DART line (rapid rail transport) and investment in the roads network.

Education

Another €3.8 billion has been allocated to the Department of Education to create 19,000 new primary school places and 43,000 secondary spaces by 2018 and 2022 respectively. A new 800 pupil international school in Dublin has been given the go ahead providing pre-school, primary and secondary education and there is increasing appetite for wider introduction of the International Baccalaureate.

So, in terms of site selection the message from Ireland is clear: the real estate is going up, the carpets are going down and our doors are very much open.