Setting up: Over supply=Low rent

Staecows

Hi folks,

I am at the planning stages of starting a new business to be based in Dublin City (the city centre probably but I'm keeping my options open). I am aware of the situation with regard to the massive oversupply of office space but I'm not sure where to start to exploit this situation to secure low rent for my future business. (I'd rather avoid agents as I am not entirely convinced that they would offer me anything in line with the realities of the market)

Ideally, I am looking for around 3000sq feet of open plan space for a medium term lease with low rent and no rent reviews for, say, three years.

There are bound to be developers out there, that have built commercial property around Dublin City Centre, that would only be delighted to have someone looking to take a lease on some of their property and reduce some of their overheads. My question is, how do I find these properties/property developers?

(I suppose an alternative route might be community groups that have taken it upon themselves to seek commercial tenants for properties that have become vacant in their community and are in danger of becoming derilict - no doubt there would be good deals to be had in this situation too... so if anyone had some info on this angle that'd also be very helpful.)

Any help would be greatly appreciated, so thanks in advance!

-Staecows

byrne0f56789

You would probably get better deals away from the city centre. However, it all depends on how important central office space is to your business. I would always look at not renting any office space when starting a business. In other words, will your garage do the job?. It worked for Google, Apple, Dell and countless other businesses during the start up stage.

Rent is dead money, especially if you do not need to show clients your office.

Staecows

Thanks for your reply. If it was just for my own office i'd be inclined to agree 100% with your point of view. However it will be a high traffic business premises so location and property will be important in this case.

antoinolachtnai

If you don't have any developer contacts, you will just have to talk to the agents. I can assure you that the agents are acutely aware of their own problems.

In commercial property, sometimes the tenant instructs their own agents to search and negotiate on their behalf. This will obviously cost something, but it might be worthwhile.

I would say that you won't get as big a bargain as you want because you might not be a 'strong covenant', i..e, they don't know whether you will be able to stay in business and stick paying the rent and meet your commitments under the lease.

There was some coverage of the rents that Facebook could expect to pay for their new office in yesterday's independent.

fiscalstudent

I was going to recommend www.officeireland.ie but actually it appears their only in Limerick. I would think your right in initially avoiding agents. Have you any idea where you would like to locate, as in general area? You want to focus on new developments that have a choice between you and continuing to sit empty, I know in Cork there is amazing deals on office space in Blackpool (just outside city centre) as a huge amount were built and have very few tenants. So I would suggest checking out new developments in your target area and checking them out, so that when you go to negotiate you know their situation and occupancy levels etc.





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antoinolachtnai

If you want something like officeireland, you could go to regus or prem group in dublin. This is always going to be more expensive than a straight lease, but it will be much more flexible and might meet your needs better as a startup.

Sonnenblumen

Staecows wrote: »

Hi folks,

I am at the planning stages of starting a new business to be based in Dublin City (the city centre probably but I'm keeping my options open). I am aware of the situation with regard to the massive oversupply of office space but I'm not sure where to start to exploit this situation to secure low rent for my future business. (I'd rather avoid agents as I am not entirely convinced that they would offer me anything in line with the realities of the market)

Ideally, I am looking for around 3000sq feet of open plan space for a medium term lease with low rent and no rent reviews for, say, three years.

There are bound to be developers out there, that have built commercial property around Dublin City Centre, that would only be delighted to have someone looking to take a lease on some of their property and reduce some of their overheads. My question is, how do I find these properties/property developers?

(I suppose an alternative route might be community groups that have taken it upon themselves to seek commercial tenants for properties that have become vacant in their community and are in danger of becoming derilict - no doubt there would be good deals to be had in this situation too... so if anyone had some info on this angle that'd also be very helpful.)

Any help would be greatly appreciated, so thanks in advance!

-Staecows

We were searching for newer premises for 18+months and much of last year was an eye opener, in spite of all the negativity about commercial property, the reality is rents in Dublin are still holding up. Sure some minor discounting is available but for decent 3,000 sqft premises in good location expect to pay a premium. Landlords and agents are holding out, I know of several properties still vacant over a year on because landlord is still holding out for asking rent.

Cheap deals are for crappy premises in crappy locations where you wouldn't want to be found dead with a client.

Because of the current volatility in markets, renting is actually smart. Totally disagree with the notion 'rent money is dead money'. Absolute nonsense, in those circumstances rent is an overhead, and a more manageable one at that. Smart way is to have the financial flexibility and independence of cash in hand, especially if credit squeeze continues. A non liquid asset in volatile times is a potential life killer not life saver.

Good luck.

antoinolachtnai

Well, rent is dead money in that in itself, it won't make anything (unless you are running 5-a-side soccer or tennis courts).

But 3000 ft? that's space for 30 people, a lot to start up with. Can you really afford to have 30 people sitting in the office? I don't know, depends on your business.

fiscalstudent

Wow big article in sunday tribune business section about the new modern offices you can rent. Although officeireland aren't in Dublin the following are

www.glandore.ie
www.theoffice.ie
www.dublinmaildrop.com

seem ideal for a small start up




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officeman

H i, I am the office.ie and if any one would like an office or virtual office I can not be beaten on price or services am here on the M7 and any one can call in for a look see and a coffee......

fiscalstudent wrote: »

I was going to recommend www.officeireland.ie but actually it appears their only in Limerick. I would think your right in initially avoiding agents. Have you any idea where you would like to locate, as in general area? You want to focus on new developments that have a choice between you and continuing to sit empty, I know in Cork there is amazing deals on office space in Blackpool (just outside city centre) as a huge amount were built and have very few tenants. So I would suggest checking out new developments in your target area and checking them out, so that when you go to negotiate you know their situation and occupancy levels etc.





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busman

Sonnenblumen wrote: »

I know of several properties still vacant over a year on because landlord is still holding out for asking rent.

Total speculation from me but I think I read somewhere that this is to do with valuing the properties. If they reduce the rent, then the book value of the property will be reduced. Sometimes it is better for them to leave them vacant with a higher value. The banks might have an input in this!

I'm no accountant but sounds plausible to me!

Mickk

Rents are coming way down, I am taking a 7000sq ft very high spec retail showroom and warehouse in Sandyford Industrial Estate for a third of what the unit next door went for two years ago. (and 60% of what they advertised it last month)

darc

Rents are definitely coming down in the city centre - even retail rents have dropped by up to 40%, including the grafton st area, and the laughable key money has disappeared.

Always best to use agents, but let them fight for your business - draw up a list of 5 / 6 locations you are looking into and give the 5 main commercial agents the details and ask for thier best terms for the leae you are looking for. - you should be able to get at least 3 months rent free and pay less than €60k / year for prime space. Agents know the market has dropped whereas Landlords have their ears closed.

Agents - Mason Owen Lyons, Savills, CBRE, Bannon, Lisney and Jones Lang Lasalle.

Search daft.ie http://www.daft.ie/commercial/ and you'll ahve an idea of going rates.

officeman

Well this may be not the case, it may be that there is no one to pay a reasonable amount of money for these offices...like me I have offices to rent and I wont refuse any offer with in reason, look at my web site www.johnstownbusinesscentre.ie best value in the whole of EUROPE..:eek:

busman wrote: »

Total speculation from me but I think I read somewhere that this is to do with valuing the properties. If they reduce the rent, then the book value of the property will be reduced. Sometimes it is better for them to leave them vacant with a higher value. The banks might have an input in this!

I'm no accountant but sounds plausible to me!

MrPillowTalk

Offices in Dublin city for medium sized premises haven't dropped nearly as much as retail or industrial rents, probably because there wasnt a big oversupply to begin with and there wasnt anyway near as much rental increase as say the overpriced retail sector.

Typically offices wouldl lie idle for 6 months if the landlord is seeking a strong covenant and longer lease term, landlords are far more flexible now as in they will take on start ups and agree to short leases however the prices dont seem to have dropped by a whole lot compared to other sectors.

Take a look on Daft, dealing with an agent may be unavoidable though.