Inside The IDA's Plan To Help Property Drive Foreign Investment In Ireland
Whether it’s Facebook’s mega signing in Ballsbridge last autumn or Wuxi Biologics’ decision to pick a 64-acre site in Dundalk for its first base outside of China, the availability of high-end property options is seen as a key element of Ireland’s ability to attract and enable the growth of foreign direct investment.
That’s reflected in the scale of IDA Ireland’s property division, which comprises almost 50 people working across five teams, covering everything from sourcing of land to delivery of buildings and facilities management. FDI has helped fuel the growth of the property sector. Now property is helping to fuel FDI.
Damien Kilgannon, who heads up that division, talked Bisnow through the team's remit and the particular challenges and positive aspects of the market.
It has been another bumper year for the agency, which secured 265 investments in 2018 — 134 of these involved bringing in brand new clients, 73 were expansions by existing clients, and 58 related to research and development projects. Employment at IDA client companies increased by more than 14,000 in the 12 months to the end of 2018, to 229,000.
The prospects for 2019 are looking good so far. Following record take-up of office space in Dublin in 2018, a large proportion of it driven by FDI companies, Kilgannon expects activity from multinational clients to be strong again this year, albeit with a different composition.
“There were some very, very large transactions in 2018," he said. "The pipeline is still strong for tech and we don’t see that abating but the size of each project may be not on the scale that we saw in 2018."
But it is not all about Dublin for the agency, which controls a landbank of almost 3,000 acres spread across 12 strategic sites and 36 business and technology parks around the country.
“Attracting and winning foreign direct investment in regional locations is contingent on the availability of property solutions," Kilgannon said. "We have a focus on every region from a property perspective and we build in areas where we see a deficit — where solutions don’t exist or, if they do, aren’t of a standard that will attract FDI.”
The property division’s capital expenditure came to €50M last year and it has a projected spend of €87M in 2019. This compares with €10M spent in 2015.
“Government is investing in property facilities in regional locations to continue to serve the needs of FDI clients,” Kilgannon said.
Four building projects are currently on-site as part of IDA's €150M five-year capital investment programme — offices in Dundalk and Limerick and technology buildings in Waterford and Galway. Six further schemes — including at Carlow, Sligo, Athlone and Dundalk — will begin in 2019.
Kilgannon said some of IDA’s biggest successes in 2018 came on the back of availability at its parks and strategic sites.
“These are 20- to 30-year projects, from the acquisition of land and delivery of infrastructure and servicing, and they become overnight successes.
"The €325M investment by Wuxi, the largest biologics investment into Europe by a Chinese company ever, is a phenomenal news story. We won that on the basis that we had the land, we had the services and we had the advanced planning for a biologics facility in Dundalk. Without making the investments and delivering the infrastructure, the services and the certainty to clients, we can’t win these very large investments.”
IDA also delivers buildings through public private partnerships. For example, Fine Grain Property completed a 45K SF office development in Parkmore East Business Campus in 2018 following an agreement with IDA.
And the agency works on what Kilgannon describes as client-centric solutions for companies that can’t find suitable property in their chosen location.
“They ask IDA or we offer to deliver a solution specifically for them at commercial rates," he said. "In Sligo, Nenagh and Castlebar we have acquired or developed client-centric solutions for the needs of the particular clients in exchange for commercial terms at market rates.”
Because of strong activity anyway in the Dublin market, the IDA doesn't typically develop buildings in the capital. It does, however, have a number of business parks around the periphery of the city where land is available, and has partnerships with South Dublin County Council at Grange Castle Business Park and with Fingal County Council at College Park.
“We do provide land solutions for companies,” Kilgannon said. “Where a solution doesn’t exist we will introduce the client or they use their own property agents to find partners to deliver building solutions for them directly in Dublin.”
The property marketing team joins most IDA client itineraries and — in the case of companies coming to Ireland for the first time — provides an overview of the market and advice around pricing, availability, and the advantages and disadvantages of various locations. Where companies decide to locate in Dublin, the property division usually works with agents to identify what’s available, draws up a shortlist and accompanies the clients on viewing trips.
Where existing clients are expanding their operations, the engagement varies.
“Some companies might have a real estate office within Europe that’s larger than the IDA property division and they will look alone and may involve us at some point during their engagement with the market," Kilgannon said. "Typically with new companies we’re 100% involved. With companies that already have a large footprint in Ireland, it’s on a case-by-case basis.”
The availability of flexible office space — through providers like WeWork, Iconic Offices and Glandore — improves the marketability of Dublin as a location for FDI, according to Kilgannon.
"It is attractive to some clients as it allows them to dip their toe in the water," he said. "Or indeed, companies that already exist here that are trying to compete for business within their own organisations abroad have the flexibility to be able to say they have ready-to-go space without actually having it. So it helps on a number of levels.”
And it is a model the IDA itself is now offering outside Dublin. In November, the agency launched The Landing Space, a serviced office offering in Sligo developed in partnership with IT Sligo and Sligo County Council.
“Companies can make a decision fast to grow and scale or to try out the location,” Kilgannon said. “It also allows the property market in that location to develop the solutions to enable companies to grow.”
The availability of good quality buildings outside Dublin is something of a challenge. Kilgannon said large-scale development is starting to happen in Cork, while Limerick also has some big office projects on site. In Galway, meanwhile, Gerry Barrett has permission to build almost 2.8M SF of offices at Bonham Quay and at least two other large projects are in the pipeline.
“We certainly have demand for Grade A office buildings in town centre locations in regional cities like Galway,” Kilgannon said.
In the next tier of towns, there is demand for urban centre offices but a distinct lack of quality, Kilgannon said, adding that in some cases where space is available the properties are often in a distressed state. “Without a pre-let, the owners don’t have the capacity to invest in order to facilitate its successful marketing.
“When you bring a company to see it and the visiting team is made up of head of marketing, head of HR and the chief financial officer, they can’t see beyond the dirty windows and the issues with the particular building. We have encouraged some owners and funders to invest in marketing suites and high quality marketing material for these facilities and that has yielded results for some in regional towns.”
Property has also been on the agenda internally at IDA Ireland of late as it plans to move its global headquarters in Dublin from Wilton House, where it has been based since 1985. In Q3 of this year, the organisation will relocate to Clancourt’s Three Park Place where it will take the upper six floors, totalling 112K SF. Science Foundation Ireland, the Marine Institute and Sustainable Energy Authority of Ireland will take the remaining three floors in the building. Fit-out is set to begin over the next week.
“We’re in the planning phase of that move and very heavily involved because facilities management is part of the property division," Kilgannon said. "We’re all working together to make sure we’re ready to move and the building is ready to receive us."
However, developing, identifying and supporting the delivery of a varied range of property solutions so Ireland can continue to punch above its weight in winning foreign direct investment will remain the main focus for the team.