Dublin Offices Turn Corner, But New Investment Runs Dry

The worst is behind Dublin’s office sector, but the market needs speculative development and international capital, according to Eagle Street Partners CEO Shane Scully.

Speaking at the Bisnow Dublin Real Estate Outlook 2025 event last week, he said that in terms of attracting overseas investment, Ireland had a “good story to tell” and that in uncertain times, most investors are looking for stability, long-term acquisitions and a “boring investment environment.”

Scully said he believes the sales process at North Docks, the project jointly owned by NAMA and Oaktree Capital Management that failed to garner a bid last summer, reflected the market’s trough. 

“I think the bad news is behind us,” he said.

Environmental, social and corporate governance-compliant Grade A available stock is running low, which is pushing rents up in the city centre.

“Current rents just don’t cut it, and I feel they will jump considerably, perhaps this time next year,” Scully said. “In the suburbs, it’s very different. They might as well be a different country.”

He said the space crunch will spur the launch of build-to-suit developments, and spec projects should follow — if investors are bold enough.

Dublin developers haven’t done as many conversions of older offices to residential as they could have, Scully said, though more typically, conversions have been focused on transition to hotels or emergency accommodation.

“It’s hard with the current regulations to make it work. We don’t have many offices that would be more profitable as residential, so it won’t bring a lot of product to market,” he said.

Scully called for more support from the two major Irish banks to get development moving.

“We’ve overlearnt the lessons from the past (the Celtic Tiger crash), and we’re not letting risk-takers come in and take the risk,” he said.

Deloitte partner Daniel Lockley added that a lack of core capital and limited transactions have hindered the market’s ability to structure pricing. 

Most sale activity has been value-add, and the bulk of investors are looking for distressed assets. 

The possible sale by Kennedy Wilson of 20 Kildaire Street and Capital Dock, which are being offered separately for a combined €145M, should help set valuations, Lockley said.

“The question is who will be brave enough to push forward with the first speculative office,” he said.

Fine Grain Property founder and CEO Colin MacDonald said Ireland remains attractive, but he said that above the €15M asset size, there is very little happening.

“There is plenty of alternative debt coming, although we don’t like it. We prefer long-term, stable lenders, but very few of them are in the market,” he said. 

“And the slow pipeline is creating a problem for the future,” he added. “The discussion is too much about short-term vacancy rates, but the issue is that rents are not justifying development costs. Dublin rents are a third of London’s — is that valid?”

Bisnow’s next event in Dublin is the Ireland Hotel Outlook event, which will take place at The College Green Hotel on 15 May.