Office Blocks: A high value office block at one of the city's best locations near Fitzwilliam Square is likely to be redeveloped after it is sold says Jack Fagan
The Irish commercial property market will get a shot in the arm this week with the announcement by the Irish Property Unit Trust (IPUT) that it is to sell one of its high value office investments, Gardner House, at Wilton Place, Dublin 2.
Fergus O'Farrell of Hamilton Osborne King is quoting a guide price of over €65 million for the 23-year-old office block which is likely to be redeveloped by whoever buys it. It stands on a site of 0.7 of an acre along the Grand Canal and will be sold by tender on April 6th.
The seven-storey over basement building is let to PriceWaterhouseCoopers on a 35-year full repairing and insuring lease from December 1983, and though the accountancy firm is due to relocate to Spencer Dock later this year, the lease still has almost 13 years to run.
The present rent roll of €2.65 million from the 7,000sq m (75,348sq ft) block equates to €334 per sq m ( €31 per sq ft) and €3,175 per car space. The next rent review in December 2008 is expected to show a significant increase because prime rents in the area are already up to €530 per sq m (almost €50 per sq ft) while car spaces have already hit the €4,000 mark. There are 104 spaces on site.
The location of Gardner House next to the IDA headquarters at Wilton Place raises the possibility that the owners of that 12,077 sq m (130,000 sq ft) complex, Bank of Ireland Asset Managment and Salix, may be among the bidders now that the State industrial promotions board is "considering" relocating in the city.
Treasury Holdings, already committed to picking up the expensive tab for the PWC lease when Spencer Dock is completed, recently put down a marker by paying a surprisingly strong €30 million (€7 m above the guide) for an adjoining apartment block with 40 vacant units on Lad Lane. Significantly, Treasury does not apparently have to close that deal until the end of this year. Although the apartment block has 40 parking spaces at street level, the separate car park in the basement is actually part of the IDA building. If Treasury plans to assemble what would be a top class site midway between Leeson Street and Baggot Street Bridge, then it will obviously have to pitch for Gardner House.
The IDA block may well come on the market too if the State company decides to move.
At the end of the day, it seems almost certain that the three adjoining buildings will eventually be redeveloped as a high density office or apartment scheme.
Another major player likely to be in competition for Gardner House will be Ellier Developments, the company headed by Francis Rhatigan and Chris Jones, which is awaiting a decision by An Bord Pleanála on their plans fora major residential scheme on an adjoining site on Lad Lane..
Niall Gaffney, investment manager of IPUT, which acquired the block in 1989, said its decision to consider a sale at this stage formed part of its strategy to upgrade and modernise its portfolio of 61 properties.
With the properties now valued at over €830 million, IPUT was mindful that offices accounted for over 50 per cent of the portfolio.
Next June, it would be completing a €40 million acquisition of a newly built 4,645sq m (50,000sq ft) block on Sir John Rogerson's Quay that had been pre-let to Dillon Eustace, solicitors."
In this context, the sale of Gardner House may prove timely."
