SIOR Report Article

Ireland: A Land of Opportunity for Brokers

By: Paul McNeive

Many may be surprised to learn that Ireland regularly vies for the title of the biggest exporter of software in the world and continues to grow. The number of multinational companies located in Ireland gives this country extraordinary range and depth. According to IDA Ireland, half of the more than 1,600 global companies in Ireland have been here for over ten years, including Google, Facebook, and Amazon. Microsoft, Intel, and IBM are among the many on the island for over 20 years.

Many of these companies have their European headquarters in Ireland and the deal-sizes are huge; Facebook, Google, and LinkedIn are among a handful occupying around 750,000 to one million square feet (70,000 to 93,000 square meter) each, and Salesforce’s new headquarters is said to be bringing their footprint over 500,000 square feet (45,000 square meters).

Information Communication Technology has been the driver of this growth, and the clustering of global companies in Dublin’s docklands has seen the area dubbed “Silicon Docks.” The strength of the technology sector was underlined in 2020, when Ireland was the only country in the EU to record economic growth (according to IDA Ireland). Other sectors have boomed too, and nine of the world’s top ten pharmaceutical companies are also represented, with many clustered around the city of Cork, in the southwest.

At the center of this success has been the Industrial Development Authority (IDA), the state body charged with attracting overseas investment. IDA has a network of offices around the world, and brokers would be well advised to develop relationships with the local staff, as a source of new requirements.

A key part of this story has been Ireland’s sometimes controversial 12.5% tax rate for overseas companies. However, companies will always say that access to talent, the high standard of education, and the availability of international workers here (10% of the population) are equally important. Ireland has other valuable advantages, and post-Brexit, is the only naturally English-speaking nation in the world’s largest trading bloc.

The recent OECD agreement to introduce a minimum corporation tax rate of 15% is being resisted by Ireland, but that opposition looks likely to fail. Although Ireland will benefit from the higher tax rate domestically, the country may lose up to one fifth of its corporate tax income, as multinational companies will be deterred from routing global sales through their Irish headquarters.

This multinational activity is driving a strong property market and headline rents for Dublin office space are approximately €60 per square foot (€645 per square meter). There is a strong pipeline of new development, and Savills has produced new research for the first half of the year to say that of the approximate two million square feet of offices which will be completed in Dublin this year, 75% is pre-let. The market took a deep breath in 2020, when the pandemic caused Google to pull-out of a deal to lease a new scheme in Dublin docklands of 180,000 square feet (16,700 square meter), but within months, all of that development had been leased by new arrival, TikTok.

The boom in occupational activity in Ireland has been followed by a hot investment market, with over €3 billion of property changing hands last year. Most of the global funds are active in Ireland, whether buying commercial investments, developing, or increasingly in large-scale private residential investment (PRS). Paul McDowell, SIOR, spoke with me about the huge opportunities for SIOR members on the investment front, and he sees great advantage in transacting investment business internationally.

The impact of Brexit on the Irish economy has yet to be felt, as the pandemic struck just as Brexit was activated. There are concerns over the effects on the important Irish export market to the U.K., however, the effects on the commercial property market have been positive, with a range of UK financial institutions, legal firms, and EU bodies opening new Irish bases.

Brexit has introduced some political instability into Northern Ireland (the six counties governed by the UK). For political reasons, a “hard border” between Northern Ireland and the Republic of Ireland could not be introduced, but the resulting “Northern Ireland Protocol,” means that goods being transported from the British mainland to Northern Ireland, are being checked and delayed, to ensure that they are not destined for the EU, via the Republic.

Another extraordinary success has been the boom in the development of data centers, and the 55 data centers grouped around Dublin comprise the biggest metropolitan cluster in Europe. There are 20 further data centers under construction, including several large campuses. These facilities are served by 18 undersea cables and two new cables were recently laid to Denmark and France, running on either side of Great Britain, to strengthen autonomy post Brexit.

Jim Kerrigan, SIOR, managing principal of North American Data Centers based in Chicago, underlined to me the potential for brokers in the data center sector, which he says is underpinned by a favorable climate and the availability of power and a talented labor force. However, he cautions that brokers should become expert in the sector and concentrate on identifying the developers who are creating the market, rather than simply chasing the biggest occupiers.

Logistics is a hot market too and is relatively immature, with a lack of modern stock. Many of the global logistics players are active in Ireland and Amazon is reported to be planning a 650,000 square foot (60,000 square meter) fulfillment center.

Another who has capitalized on activity in Ireland is Andrew Smith, SIOR, a partner in Carter Jonas in London. He has been involved in several Irish deals, some of them SIOR referrals, and which he found to be “great experiences and very straightforward.”

From New Jersey in the U.S., Michael Maroon, SIOR, managing partner of The Acclaim Group, referred a technology client to Dublin-based James Mulhall, SIOR, the managing director of Murphy Mulhall. Maroon said that the resulting office deal was “an easy process and that his client was very comfortable with the SIOR ability to transact business in Ireland."

Mulhall said that Ireland offers “huge potential for SIOR members” and he is keen to raise awareness of the depth of occupiers here. He suggests that SIOR brokers should be asking their clients if they can help them with their property requirements in Europe, and asking the question early, “to head-off the global mandate issue.”

Iain Finnegan, SIOR, managing director of Finnegan Menton, is another Irish member who has landed instructions through the network. He, too, is keen to raise awareness of the potential in Ireland and he advises U.S. brokers to ensure that their clients are informed early that tenant representation fees are payable by the tenant in Europe. Michael Boyd, SIOR, founder of REA Boyd's in Kilkenny, is another member who has been involved in SIOR transactions here. He emphasised that U.S. members visiting Ireland will be surprised at how U.S. orientated Ireland is, and at the level of personal attention from individual SIOR members.

With a population of five million people, Ireland is “punching above its weight” in the business world and represents a land of opportunity for commercial property brokers.

CONTRIBUTING MEMBERS

Media Contact

Alexis Fermanis SIOR Director of Communications afermanis@sior.com

Paul McNeive

Paul McNeive is a former managing director of Savills in Ireland. He now works as a motivational speaker, author and journalist and will be a speaker at the SIOR International European Conference in Dublin, 13-15 July 2022.