Building a €40 million office block on spec is a risky undertaking at the best of times, but building one in a city with a substantial oversupply of office space seems almost foolish.
Roy Strudwick, the 68-year-old English developer behind the 150,000 sq ft office block that will be the third element of the Grand Canal Square at the heart of the "urban village" being developed in Dublin's south docklands, is clearly no fool.
But with 40 years' experience in the British, US and Irish markets he also knows there is no guarantee that anyone will want to rent it. And the chances are that if they do, they will probably not want to pay the asking rent.
He is no doubt keenly aware that Google, the company behind the eponymous internet search engine and the most high-profile tenant to move into the areas surrounding Grand Canal Basin - taking space in Liam Carroll's Barrow Street development - agreed terms significantly below the €45 per sq ft that was being sought.
It was not an easy decision, he admits. "What happened was last year around September I thought the market was beginning to look like returning to some sort of normality and I spoke to Pat McCormack of Palmer McCormack about possibilities and then this one came up for tender.
"There was a certain amount of nervousness because the market was still not a great market," he adds. The risk was compounded by the the terms of the tender, which called for plans to be submitted to the Dublin Docklands Development Authority within five weeks of signing the contract and work to start within three months of the DDDA granting permission. Failing to meet the deadlines will cost Mr Strudwick his deposit.
The tight terms "meant you didn't have the luxury of buying it and saying, 'well if the market's not turning I can sit on it and wait for it to turn'," he said.
"It was quite a strong decision to make, but the thing that sold it to me in the end was that I felt that the market was on the turn and secondly I do believe it is the best spot in the docklands... and is as good a spot as there is in Dublin," according to Mr Strudwick
His building will occupy the south side of a newly created square looking out on the Grand Canal basin. A performing arts centre designed by the internationally famous Daniel Libeskind will form the centrepiece and a luxury hotel will fill the remaining side.
Designed "with light" by Mr Coli O'Donoghue of Duffy Mitchell O'Donoghue, Mr Strudwick's building will vary from "a solid three-dimensional object to a transparent one" as "daylight changes from cold blue to deep orange".
But Mr Strudwick's confidence is based on something other than good design and optimism. The current oversupply in office space is concentrated in the suburbs, he believes. "In fact if you go out and look for an office in Dublin 4 you will find very little. Most of the agents I have spoken to are quite happy with what they are letting in Dublin 4 at the moment," he says.
He also believes that the tight timeframes that he is working to mean his building will be available ahead of some of the other big schemes in this area.
"What the DDDA has done is forcing us all to get on with it. You don't have the luxury of sitting back and saying 'I will do it when everybody else has built theirs'. By forcing people to work to programmes they [ the DDDA] will get it built so the impact is quite quick. The whole thing will be created in two and a half years' time," he says. His building is due to come on stream in early 2006.
Grand Canal Square is Mr Strudwick's first foray into the Dublin market in more than five years. He is best known for the Sweepstakes development on the grounds of the old Irish Hospital Sweeps in Ballsbridge which he bought in 1988 for £6.6 million, before offloading part of the site to Cosgraves for £4.5 million.
Although he had lived here since 1979, he had previously only been involved in a number of small developments. His long association with Ireland has its origins in a number of trips made here in the 1960s and 1970s with Irish associates in the building trade.
"We got used to the place, came more and more and finally bought something," he explains. In this case "something" turns out to be Ballygallon Stud in Inistioge, Co Kilkenny where he lives with his wife, who breeds horses.
The life of the Irish country gentleman is perhaps not what London-born Mr Strudwick had in mind when started out as a jobbing builder in the south of England in the 1960s.
His company, Royco, was primarily involved in house building and medium-sized commercial development in the south of England.
It went public in 1972 and initially did very well with the shares going from 85p to 122p before collapsing to 4p in 1974 when the property market cooled. It was taken private again by Mr Strudwick in 1980 amidst some annoyance in the city.
Mr Strudwick then set his sights on New York, developing over one million square feet of commercial and residential property in Manhattan during the first half of the 1980s.
Along the way he sold the house-building side of the business to its management in 1985, and changed the name of the company to Ryde Developments.
Then came the Sweepstakes in 1988. "That was a strange one. You had to go to the tender with a £250,000 draft. Basically we bought it on the basis that I though the market was in good stead then and it was moving on. Unfortunately it took us two years to get planning permission, which was a bore. We started work, but we only built one of the buildings and sat for four years. Once the market started moving we built the rest out. It was much longer than I expected but it was worth it," he says.
Mr Strudwick held onto one of the three buildings, but shifted his investment focus to the retail sector in Scotland and England. He has recently exited these properties and is once again interested in Dublin, as evidenced by the Grand Canal scheme.
"I am not bearish about it [Dublin]. It is a difficult market, but not as problematic as Manhattan. The problem with it [Manhattan] is that its like that," he says tracing a bell curve on the table top with his finger. " If you get caught in the wrong spot its dangerous."
He cites the example of one of the New York properties he was involved in which was sold to insurance comapny Aetna for $60 million, who in turn had an offer of $75 million which they did not accept. In 1991, Aetna ended up handing back the building to the banks, who then sold it for $18million. Three years later it was sold for $100 million.
"Its a tricky market," he says.
It certainly puts Grand Canal Square and Dublin in a certain perspective.
