Location most critical factor for 2011 Dublin office occupiers
Dublin, 18th November 2011 – Property consultants CBRE today released the results of a survey they recently conducted of tenants who have signed a lease on an office building in Dublin over the last 12 month period.
For a copy of the full survey results report please download at the PDF link further below.
According to Marie Hunt, Executive Director at CBRE in Dublin who co-ordinated the survey, “There has been much analysis conducted in recent years on the reasons why multinational office occupiers choose to locate in Ireland over other jurisdictions. There has also been much discussion about why occupiers have a preference for locating in Dublin as opposed to other locations around the country. There has however been little analysis of the location decisions corporate occupiers make at a local level. This survey was conducted to determine why some occupiers choose to locate in particular locations of the city, their reasons for locating in the specific buildings they occupy and the factors they considered in making their location decision. Interestingly, the old adage of ‘location, location, location’ seems to hold true for office occupiers in the capital with the greatest proportion of respondents saying that location was the primary driver behind their ultimate choice of new premises in the capital ”.
Of the 250 office occupiers surveyed by CBRE, just less than half of respondents (49%) employed 20 staff or less, 17% employed between 50 and 100 employees and 10% employed over 200 staff. 21% of respondents had set up a new operation in Dublin during the last 12 months while the remaining 79% were relocating from other office buildings in the capital.
Over a third of respondents relocated to offices in the Dublin suburbs, which CBRE say is presumably in an effort to cut costs, considering the significant differential in rent that exists between the suburbs and the traditional city centre. The popular Dublin 2/4 district accounted for 46% of new lettings to respondents in the last 12 month period, with occupiers no doubt attracted by the fact that more favourable rents and letting terms were on offer in the central business district than would have been the case heretofore.
45% of those respondents who relocated to a new building in the last 12 months said they relocated because their existing premises was too small to accommodate their needs. 13% of those occupiers who relocated downsized from larger offices. 16% of respondents identified the costs associated with renting and running their old premises as their main reason for relocating.
When asked what factor primarily influenced their decision in choosing a new office building, a third of respondents identified the buildings location as the most important factor. When asked what factors influenced the choice of location for their new building, the most important factor identified by 31% of respondents was the availability of public transport in the general area. The availability of amenities in the general area, proximity to clients and other businesses and the availability of car parking spaces were also cited as critical factors. Interestingly, the energy efficiency or green credentials of the building were not cited as key influencing factors in the decision-making process.
The factors that were most influential in ultimately determining the type of building chosen included the size of the floor plate available and the appearance of the building. The level of fit-out and the buildings specification also ranked highly.
The total amount of rent payable and the rent-free package on offer were cited as the two most influential aspects of the financial package considered when making a location decision. The length of lease available and the cost of service charge and rates were deemed to be the next most important considerations. Interestingly, occupiers were least concerned about their repairing obligations when considering the financial package on offer in the various buildings.
76% of office location decisions were ultimately made at a local level with the remaining 24% made by head offices overseas. Exactly half of the respondent organisations who relocated or set up a new office operation in Dublin in the last 12 month period said they consulted staff in the decision-making process about relocation.
According to the respondents to this survey, the majority of leases were signed within 3 months of having made a decision on location (50%). However, 22% of respondent firms said it took between 3 and 6 months to conclude negotiations, 20% said it took between 6 and 9 months with 8% saying it took up to 9 months to complete negotiations. This certainly reflects the increased layers of bureaucracy involved in getting transactions concluded in the current climate. Of the new leases signed in the last 12 months, 23% were for a terms of up to 3 years, 19% were for a term of between 3 and 5 years while the majority of leases signed were for a term of between 5 and 10 years. 19% of respondents to this survey, signed a new lease for a term for 10 years or greater.
Commenting on the survey, Paddy Conlon, Director and Head of Corporate Services at CBRE who acts for many occupiers in sourcing office premises in the capital, said, “The results of this survey confirms our assertion that rental cost alone is not the deciding factor for many corporate organisations when making location decisions. Improvements in competitiveness and more affordable rents are certainly encouraging some occupiers to move premises in the current climate. However, while rent may be the key driver of the decision to move for some tenants, every organisation is different and will have different priorities when deciding where to locate their business. For some, the benefits of being located in a particular part of the city or being close to public transport might outweigh all other factors while for others the quality of the building or the layout of the floor plate might be the deciding element”.
CONTACT: Marie Hunt – 00 353 1 6185543 / 00 353 87 2727115 or firstname.lastname@example.org
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2010 revenue). The Company has approximately 31,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
In Ireland, with offices in Dublin and Belfast, CB Richard Ellis is the country’s largest commercial real estate services company, now employing over 120 employees and offering a full range of property services including property sales and acquisitions, leasing and management, investment, corporate services, project management, consultancy, valuations and research. CB Richard Ellis Ireland has been listed among the Top 100 Best Workplaces in Europe & the Top 50 In Ireland 2011, for the seventh year running. Please visit our website at www.cbre.ie or www.cbre.ie/ni.