Office PortfolioThe four office blocks - some with redevelopment potential - on the 1.4-acre site of Hibernian Insurance's headquarters at Haddington Road in Dublin 4 are likely to test the strength of the market, writes Jack Fagan
Hibernian Insurance Company is to offload its headquarters buildings at Haddington Road, Ballsbridge, Dublin 4 in the run-up to its move next October to new offices being completed at Upper Hatch Street.
Interest in the portfolio will centre primarily on two freehold four-storey buildings between Haddington Road and Percy Place which will become vacant and which may well offer the potential to be redeveloped as apartments or offices.
A third block is let to Bank of Ireland and is being sold as an investment. A fourth building is leased from Friends First and, as a second generation block, would probably need upgrading before it could be relet. Together, the four buildings have a net floor area of 10,525sq m (113,291sq ft) and stand on a site of 1.4 acres.
Selling agent NAI Mason Owen & Lyons says it will not be providing guide prices on the instructions of Hibernian. However, most valuers are likely to put a €70 million-plus price tag on the portfolio which is to be sold either in individual lots or as a single entity.
Clearly the most valuable of the blocks is Haddington House which is being vacated by Hibernian and has a floor area of 4,227sq m (45,500sq ft) and 26 basement car-parking spaces.
The block is separated from the other three and has frontage on to both Haddington Road and Percy Quay.
There should be no shortage of developers prepared to pitch for it, given the site area available - 2,000sq m (21,528sq ft) - and the obvious appetite for demolishing four-storey blocks like this one and replacing it with a higher density scheme. The value of Haddington House in the present hot market will probably exceed €30 million.
The other building about to become vacant, Haddington Court on Haddington Road, also stands four storeys over basement and has a net floor area of 2,756sq m (29,665sq ft), as well as 17 car-parking spaces. The block stands on a site of 1,470sq m (15,823sq ft). Again, this site is underdeveloped and will probably fetch over €20 million.
A similar valuation is likely to be put on the four-storey over basement block let to the Bank of Ireland on a 35-year lease from 1981. It is currently producing a rent roll of €825,012 which falls due for review this June. With a net floor area of 2,116sq m (22,776sq ft), the rent works out at €368.90 per sq m (€34.27 per sq ft).
Although the lease is not due to run out for another 10 years, the likelihood is that the bank will want to assign it before then, once it finds an appropriate site for a headquarters campus.
Developers looking at the portfolio will find little to interest them in Hibernian House which is owned by Friends First. However, they may take the view that, as sitting tenants, they would be in a strong position to redevelop the block on a joint venture basis with Friends First. Otherwise, the 35-year lease from 1980 will probably be difficult to offload, even if the next rent review is not due until 2010. The building has a floor area of 1,427sq m (15,360sq ft) and 15 car-parking spaces.
With a rent roll of €565,249 per annum, the rent works out at around €363.28 per sq m (€33.75 per sq ft). Car-parking spaces are fixed at €3,175.
Hibernian's decision to sell off its interests in Haddington Road comes after it has agreed lease terms for up to 18,580sq m (200,000sq ft) of space being built by the Clancourt Group at Upper Hatch Street.
The company will occupy two blocks at Park Place, one of 9,141sq m (98,400sq ft) and the other of 9,382sq m (101,000sq ft). The unusually deep floor plates of 22.5 metres (74ft) - compared to the average of 13.5 metres (44.5ft) - appealed to the insurance company because of the scope for achieving greater efficiency and lower occupational costs.
The rent will probably be marginally over €430.5 per sq m (€40 per sq ft) given the huge volume of space involved. Clancourt is also likely to have given a two-year rent-free period and standard fit-out, as well as air conditioning.
The overall development - there is another block of 8,435sq m (90,800sq ft) - has 133 car-parking spaces which will rent at around €3,000 per space.
The Park Place letting was handled by Declan O'Reilly of HT Meagher O'Reilly and Willie Dowling of CB Richard Ellis. Tony O'Loughlin of Jones Lang LaSalle advised Hibernian.
The Hibernian Group has been anxious for some time to bring all of its 1,200 Dublin-based staff together as soon as possible in a modern working environment. The majority of these are based in Haddington Road but others also work in buildings owned by the insurance company at the corner of Dawson Street and Nassau Street.
