Central Bank cuts price of Dublin docklands offices to €105m

After seeing its initial bid to secure a buyer for Block R in Spencer Dock frustrated by the stop-start nature of the Covid-19 lockdowns, the Central Bank of Ireland will be hoping that the appetite of investors for opportunities in Dublin’s docklands remains undimmed now that life has begun to return to normal.

Having received a number of expressions of interest when it first brought the property to the market towards the end of 2020 at a guide price of €110 million, agent Lisney is to call in the coming weeks for bids on the property at a slightly lower guide price of €105 million for the entire. The building’s east and west wings, which are self-contained, are alternatively being offered in individual lots at guide prices of €55 million and €50 million respectively.

The proceeds of the sale, the plans for which have been in train since 2018, will be used to partially offset the €205 million the Central Bank spent in 2019 on the acquisition of blocks 4 and 5 at Ballymore and Oxley’s Dublin Landings scheme. Located immediately adjacent to the Central Bank’s North Wall Quay headquarters, those two buildings’ combined floor area of 200,000sq ft (18,850sq m) are being used to accommodate the expansion of the bank’s existing 1,815-strong workforce by up to 300 employees.

Block R in Spencer Dock, meanwhile, extends to a total area of 127,817sq ft (11,875sq m) and is located directly behind the Convention Centre Dublin and adjacent to Salesforce's new European headquarter campus, which is currently nearing practical completion. Other office occupiers in the immediate vicinity include the NTMA, Microsoft, PwC, Credit Suisse, Custom House Global Fund Services, Optum (UnitedHealth Group), WeWork, Metzler, HubSpot and A&L Goodbody solicitors.

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Split

Designed by Scott Tallon Walker Architects and built by Johnny Ronan and Richard Barrett's former company Treasury Holdings in 2008, Block R comprises seven floors of office accommodation, three ground-floor retail units and 46 basement car-parking spaces. The building was designed to be split into two self-contained wings (east and west).

The majority of the east wing (53,856 sq ft, or 5,003sq m distributed across the ground to fifth floor, and 18 car spaces) is let to the Office of Public Works (OPW) under a 20-year lease from May 2015, at a newly-agreed passing rent of €2,636,424 annum, which equates to €48 per sq ft, plus €3,750 per annum per car space. The OPW lease contains a break option which is effective in May 2027. The sixth floor of the east wing (6,319sq ft) is set to be occupied upon completion of the sale by the Central Bank on a short-term lease until September 2022 at a contracted rent of €323,950 per annum. While the retail unit at ground-floor level (2,481sq ft) is vacant currently, it offers the prospective buyer the opportunity to increase the east wing’s annual rent roll further.

In the case of the west wing (65,161sq ft, or 6,054sq m), the Central Bank has committed to renting the ground to sixth floors (58,516sq ft, or 5,436sq m)and 23 car parking spaces on a short-term lease until September 2022 upon completion of the sale. The contracted rent in this instance equates to €3,017,800 per annum.

Tesco Ireland, meanwhile, have recently signed a 20-year lease on the west wing's two retail units, with break options in years 10 and 15. Units 3 and 4 extend to 3,944sq ft and 2,701sq ft respectively and Tesco has agreed to pay a rent of €166,125 per annum, or €25 per sq ft (subject to final measurement).