In another sign that Dublin’s accommodation crisis is mimicking Silicon Valley, tech firms are now offering workers extra cash to be able to live closer to work. This is bad news for the city and its people.
Do we really want Dublin to be like San Francisco? A few years ago, the thought would have been tantalising when you think that Dublin is almost a mirror in terms of international tech headquarters of players from Facebook to Airbnb, Twitter and LinkedIn, to name a few.
From a business perspective, it sounds rosy and looks great on paper.
From a human perspective, unless you are a tech worker on a six-figure salary, San Francisco has become hell on earth. Teachers and even doctors can no longer afford to live there and the artistic vibrancy of what once made it special may be lost to the ages.
Do we want that for Dublin?
Property lockout: Echoes of a Strumpet City
Dublin is in the midst of an accommodation crisis. Young workers, single people and families are bearing the brunt of the frictions caused by soaring rents, non-existent rent controls that are commonplace in Europe and a State housing policy that has failed to deliver new homes.
Dublin may be hopping with gin joints, craft-beer emporiums and beardy men queueing for burritos but if the property crisis endures, it will be a diminished shadow of its once fun and vibrant self.
Earlier this week, it emerged that Dublin has become a victim of its own success as a haven for tech companies with the news that both Stripe – the $9bn tech firm created by Irish brothers Patrick and John Collison – and cloud giant Amazon have been lobbying the Irish Government to solve the housing crisis in Dublin.
The simple upshot of this is that tech companies are being put off by the high cost of living and lack of accommodation for existing and future employees.
It is has been reported that Stripe has donated $1m to an Irish advocacy group towards solving the housing crisis and has done the same in California with a $1m donation to Yimby (Yes In My Back Yard).
Caught in the grips of a skills shortage, if the tech giants are worried, then Dublin should be worried, too.
Yesterday (30 May), Web Summit founder Paddy Cosgrave revealed an international expansion plan that would generate 50 jobs around the world but also announced new measures to help employees with mortgage costs amid the worsening housing crisis.
The subsidy equates to around a month’s rent or a mortgage payment, and applies to staff who choose a property within 2km of the Web Summit’s headquarters in Dublin 6.
“Web Summit employees are struggling to find accommodation in Dublin, so much so [that] house and rental prices are a significant factor in hiring conversations,” Cosgrave warned.
“This is a small measure to help address the problem. But, if we have this issue as we rapidly grow the business, imagine what it is like for thousands of other companies,” he added.
If the normally bullish Cosgrave is worried, Dublin should be worried, too.
Tech giants are already substantial property owners in Dublin and Google – which employs about 7,000 people and owns the tallest building in Dublin, the Montevetro building – recently acquired the entirety of Bolands Quay. Facebook, which has surpassed 2,500 workers in the city, is already understood to have outgrown its massive building in Silicon Docks and is reportedly planning to build a whole new campus in Dublin 4.
But people do not live to work, they work to live, and failure to address the accommodation crisis by policymakers is having a major impact.
In a recent report, Growing Great Teams in Ireland: The Role of the Residential Rental Sector, co-written with Ronan Lyons of Trinity College Dublin, the American Chamber of Commerce warned that the availability of quality and affordable accommodation is having a direct impact on the hiring of talent.
We have previously warned that the accommodation crisis is harming Dublin’s perception as a go-to place for overseas talent and indicated that some are already choosing jobs elsewhere because it is too hard to find suitable accommodation.
According to the AmCham report, about 232,500 new housing units will be required nationally over the next five years, including 81,500 in the Greater Dublin area. Out of these, around 82,500 will be required in the rental sector, including 32,500 in the Dublin area. Current demand for new dwellings stands at close to 50,000 per year and, if the market cannot keep up, this will have an impact on foreign direct investment (FDI).
Last August, a study by digital recruitment firm Prosperity showed that 40pc of people it helped to hire for tech employers in Dublin came from overseas. In 2016 and preceding years, the recruiter had a rejection rate of approximately 15pc on job offers to candidates living abroad but, by the third quarter of 2017, that had doubled to nearly 30pc.
Dublin is running out of time for a 2020 vision
So, again, how bad can this get? I wrote recently about values, diversity and the tech sector and I was seriously narked by how an employee at Twitter in San Francisco on a $160,000 salary complained that they could not make ends meet.
Can you imagine that? Tech workers making between $100,000 and $700,000 in San Francisco cannot make rent and some highly paid workers at Facebook have asked CEO Mark Zuckerberg if the company could subsidise their rent. Is that where we are headed?
A 2016 report by SmartAsset revealed that to be able to afford a two-bedroom apartment in San Francisco, a worker would need to make at least $216,129 per annum. That is bonkers.
The Web Summit’s move to offer a subsidy to staff to live within a 2km reach of the office may become a sign of the times and we don’t know for sure how many firms are already offering such subsidies to employees.
The strategy isn’t new and is actually commonplace in some of the tech hubs of the US. In 2015, Facebook began offering employees at least $10,000 to move closer to the office (within 16km) but what difference has it actually made? Most likely, it has contributed to the spiralling rent situation in San Francisco and upped the pressure on non-techie residents competing for rented property.
According to The Mercury News, software engineers at Bay Area tech companies including Apple, Google and Facebook would have to fork over more than 28pc of their monthly salaries — a move frowned upon by financial experts — to pay for a home within a 20-minute commuting distance of work.
Ordinary people living within reach of these headquarters are losing their homes and there are signs that the tech giants’ deep coffers are now being used to influence zoning decisions, only adding to the chaos.
San Francisco is in the grips of what is a hyper-inflationary curve, with the result that all life is being squeezed from the city, clearing the way for gentrification and air-conditioned buses with Wi-Fi that whisk workers to and from the city and away from the madding crowds living on the streets.
Paltry accommodation will make Dublin a no-go area for tech firms because their people cannot afford to live there.
But what about ordinary non-tech Joe and Mary Soaps who aren’t software engineers and are scraping by on the industrial wage or less? Do their private sector employers even bother to try to increase their wages in line with inflation? Fat chance of that.
Is Dublin just going to become a city for tech workers? The Docklands Residential Report 2018 published by the Owen Reilly agency, which assists Dublin tech companies with lettings for employees, revealed that almost half of the renters in the desirable Silicon Docks area of Dublin are tech workers. In fact, 92pc of people who live in that area are from overseas.
What has made Dublin a special place in the heart of many is its vibrancy and diversity. A city of the ages, for all ages.
However, if it has already become a place that even tech companies are afraid to invest in, then Dublin is in trouble.