The onset of the Covid-19 pandemic in 2020 and the subsequent years of lockdowns showed us that many office-related roles could be performed efficiently on a remote basis. An apocalyptic scenario, ‘the death of the office’ was put forth.
However, as anyone who has experienced the ebbs and flows of real-estate markets understands, while sectors can face challenging times, apocalyptic scenarios are usually overplayed, as is the case here.
But there has been a shift in how the office is used and how often we use it, and this has repercussions beyond just the world of commercial real estate. Clearly, if there is a decrease in the flow of people into Dublin city offices on specific days of the week, this has wider implications for spending and footfall in the city itself.
This has raised a number of questions, ie, what is the impact on city retailers, food and beverage providers, pubs, and the staff, wholesalers, and delivery drivers who supply them? In an increasingly digitalised world, what does this mean for the vibrancy of the city, and what will the make-up of real estate in our city look like in five, 10-, and 15-years’ time?
In December 2023, the Economic Development Office of Dublin City Council appointed CBRE Research to conduct an extensive project to provide some firm analysis and data around the implications of increased remote working on Dublin city. The research, which focuses on current and future trends in offices, retail hospitality, and the future real estate make-up of the city, will inform a strategy on vacancy and dereliction for Dublin city centre.
Offices
CBRE engaged in a number of steps in order to carry out the analysis. Firstly, we surveyed our largest corporate office-occupier clients, along with a further 100 Dublin city office-based employees. We asked key questions of corporations regarding current remote working practices within each organisation, current office attendance levels, return-to-office mandates, and future plans for their office portfolios. We also asked city employees about their current working from home rates and how much they spend in the city per day when in the office.
Some of the most notable findings include the following:
-Dublin city companies are now reporting a 50 per cent office attendance rate on average across the working week; this is down from 65-70 per cent prior to the pandemic.
-On Mondays, among those surveyed, office attendance was just 35 per cent, while on Fridays it was 29 per cent.
-The peak day for attendance was Wednesday at 61 per cent.
-Of the 100 office-based employees we surveyed, 76 per cent were working remotely at least one day per week.
-The average spend in the city per employee per working week was €64 –€74.
Three questions are key when we think about a decline in office attendance. Firstly, will it be sustained? Secondly, if so, what does this mean for the long-term demand for office space? Lastly, what are the long-term implications for the city centre?
To answer the first question, we asked the subject occupiers if they currently had an office attendance mandate in place. Two-thirds of respondents said they did. When asked if productivity had been negatively impacted due to remote working, 33 per cent of respondents said ‘Yes’, with 56 per cent saying ‘No’, while the remainder were unsure.
We caveat these findings by noting that in the last 12 months we have seen many large occupiers, most notably in the United States, mandate five-day per week in-office attendance. Large corporations like Boeing and Tesla, and banks such as Goldman Sachs and JP Morgan also have mandates in place for certain staff.
While clearly there will always be demand for the best offices in the best locations, there has been a discernible shift in how these buildings are used and how often. This will impact long-term demand for office space, but by how much remains unclear. The current level of vacancy and office leasing in the city is already providing an indication; however, other cyclical and market-specific factors are also at play, and we break these down further in our research for DCC.
Retail & Hospitality
‘On the ground’, many parts of the city, particularly restaurants, bars, and clubs, are thriving in many locations in many parts of the week. Clearly, the robust economic and employment market in Dublin, combined with ongoing population growth and a strong tourism market, continues to promote a vibrant and busy city, but the make-up of this may be just shifting somewhat.
If fewer people visit the city during the working week, what does this mean for retail and hospitality trade in the city? We surveyed 50 city centre retailers and interviewed the leaders of two of the most notable Dublin retail representative groups, along with one of the city’s most notable publicans.
We questioned how footfall, consumer spending, and general trade had changed since the pandemic. The responses from the retailers we surveyed mirrored the responses we received from the retail representative groups.
-Nearly 50 per cent of retailers reported that footfall has been lower by 21–40 per cent in city centre stores since the pandemic.
-A total of 48 per cent of respondents selected Friday as the day on which they had seen the most notable decline.
-In city centre pubs, Friday lunchtime trade (previously the busiest lunch day of the week) is trending 20 per cent lower than on Thursdays, post-pandemic.
So what does this mean for the future of the city?
While there is clearly still a place for city offices and retail, and these buildings will remain the dominant segments of the city centre commercial market, an increasingly digitalised world will lead to a broader mix of buildings within the confines of the city over the next 10 to 15 years.
More ‘living sector’ property, ie, private and social apartments, hotels, and hostels, along with student accommodation and even some medical use, will replace a proportion of older offices and retail.
Indeed, examples of this have already emerged in the city, with a number of office properties being sold with repurposing plans in place, mostly for hotel and student accommodation use.
Colin Richardson is a director and head of research and consultancy at CBRE Ireland
