Office Lettings The bank is taking two floors in the Hatch Street scheme at a rate of €624-€646 a sq m, says Gretchen Friemann

One of the world's largest financial institutions, Bank of America, has decided to relocate its Irish headquarters to Park Place, the Clancourt Group's speculative development on Hatch Street in Dublin 2.

It is the latest in a long line of high-profile office deals and underscores the strength of the market in the central business district where demand now outstrips supply.

The bank is taking two floors in the scheme, or just over 1,858sq m (20,000sq ft), at a rate of €624-€646 per sq m (€58-€60 per sq ft). CB Richard Ellis Gunne and HT Meagher O'Reilly are the joint letting agents for Park Place but both companies refused to comment on the deal.

The US giant's move has a wider significance because of the substantial property it owns on the corner of Hume Street and St Stephen's Green. The bank acquired the building in 2005 following its $35 billion takeover of the credit card company MBNA and, since then, there has been constant speculation over the financial institutions' plans for the site.

It is thought that the Clancourt Group, which is headed up by the Mayo-born developer Charlie Kenny, may have secured an option to buy the offices as part of its negotiations to rehouse Bank of America at Park Place.

Jones Lang LaSalle, the bank's property agent, denied there had been any deal struck on the site and declined to confirm or comment on the company's move to the €250 million Upper Hatch Street scheme where the Hibernian Group is the main tenant.

Apart from the prime city centre location, one of the key attractions of Bank of America's St Stephen's Green building is its position between the former offices of IIB and Barclays bank. Both these properties are being leased out on a short-term basis, allowing the various owners to assemble a larger site for development.

The Irish Property Unit Trust owns 2 Hume Street, a block that backs onto Bank of America's corner property, while the Irish Airline Pilots' Association pension fund owns the adjacent St Stephen's Green building, which was occupied by Barclays bank before it relocated to Park Place in February.

All three properties are mock-Georgian, raising the possibility that planning permission would be given for a sensitively-designed office scheme on the site. However, there is little scope for increasing the amount of space on offer, a factor that might militate against any redevelopment.

According to one industry source, developers typically buy these second-generation buildings "in order to add density. But in this case it's not really an option as there would be no planning permission to increase the height of the properties and the site footprint is already fully occupied."

The real advantage of any development would be the lucrative rental income it would generate. As the scheme at 75 St Stephen's Green has illustrated, high-spec office accommodation can command top rates. The Garret Kelleher property is one of the most expensive in the country with rents around €667 per sq m (€62 per sq ft). Rates at the Bank of America, IPUT and the IAPP's buildings would be roughly half that figure, industry sources speculate.

An even more ambitious scheme could be on the cards if the new owner of the Hume Street hospital agreed to a site assembly. However, it is understood the developer, who bought the landmark building for €30 million last September, is not interested in a joint development and is looking to construct luxury offices and apartments on the site.

Despite this decision, property sources agree that in acquiring the Bank of America offices, the Clancourt Group would gain control of a pivotal city centre building and point out that, even without a joint development, the Kenny family could increase the rental income through a substantial refurbishment.

Park Place is one of the Clancourt Group's biggest assets. It was developed by Shoalwater, a subsidiary of the Kenny family-controlled company, and is constructed on the former Dunlop centre site, opposite the Iveagh Gardens.

Clancourt is one of the largest property firms in the state and owns a number of offices developments in the Harcourt Street area.