Dublin Docklands Are Doing Dandy
And Are a New Cosmopolitan Hub

Ireland's sizzling economy has fueled a building boom that is transforming the look of the largely low-slung Dublin region.

The changes have been particularly dramatic in the formerly blighted industrial port area known as the Docklands, a short walk from the city's main drag, O'Connell Street. The revitalized Docklands area has become a cosmopolitan hub for banks, international financial-service companies and law firms, according to Paul Maloney, chief executive of the Dublin Docklands Development Authority.

"It was an industrial wasteland along its main thoroughfares," Mr. Maloney says of the submarket, before the addition of a growing inventory of modern office, residential and cultural buildings. One notable addition: Next spring, accounting firm PricewaterhouseCoopers will relocate into a new 235,000-square-foot headquarters for Ireland.

Construction also is slated to start this year on the 2,200-seat Grand Canal Theatre designed by Daniel Libeskind, and next year on the 430-foot-tall U2 Tower, Mr. Maloney says. It's expected to be one of the tallest buildings in the Republic of Ireland when completed. The 32-story twisting structure, designed by Ireland-based Burdon Craig Dunne Henry Architects, will contain luxury condominiums, as well as recording studios for the famed Irish rock band that will lend its name and star power to the tower, Mr. Maloney says.

That such a relatively tall building is coming now partly reflects rising land values that have made higher density more attractive. While lower buildings are more typical in the Dublin area, soaring residential home prices are making high-rise condos economically feasible and practical, Mr. Maloney says.

Docklands isn't the only area seeing new construction. While Dublin's center city still offers centuries-old architecture, trademark cozy pubs and cobblestone streets, developers are snapping up available infill sites. In August, P. Elliott & Co., an Irish construction company and property developer, purchased the former Irish Times newspaper building for about €30 million ($38 million). P. Elliott plans to redevelop the historic building and land parcel.

The strong real-estate market comes after a surge in the Irish economy, which has benefited in part from an influx of U.S. tech firms attracted by a well-educated, English-speaking work force, a comparatively lower corporate tax rate and proximity to continental Europe. Once a lagging economy, the Republic of Ireland boasted a 5.5% increase in its gross domestic product in 2005 from a year earlier, compared with about 1.4% overall for the 12 European nations that have officially adopted the euro common currency, according to Moody's Economy.com.

Going forward, Irish growth is expected to downshift, and robust levels of new office construction make oversupply a growing risk, according to Property & Portfolio Research Inc., a Boston-based real-estate research firm. Another threat is so-called tax harmonization, which could pressure Ireland to raise its corporate tax rate to more closely align with other European Union countries. But even then, Ireland would remain an attractive location for businesses, says Pepper D. Culpepper, an associate professor of public policy at the John F. Kennedy School of Government at Harvard University.

For now, Ireland's wealthy continue to funnel money into commercial real estate, according to Pat Gunne, managing director for CB Richard Ellis in Dublin. Investment levels in the country's commercial properties are expected to reach about €3 billion this year, compared with about €2 billion in 2005.

Fully leased prime office properties in Dublin are selling for top prices of about €1,500 ($1,900) a square foot , Mr. Gunne says. By contrast, prime office properties in London's West End have fetched as much as £2,000 ($3,794) a square foot this year. "There's insatiable demand for investment properties in Ireland by the Irish," says Mr. Gunne.

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