The unprecedented rise in rents in Dublin has changed the OPW view on the provision of accommodation. It now strongly supports the idea that Government offices should consider moving from central Dublin to less expensive suburban locations whenever practical.
It holds the State's largest single property portfolio, with 11 million sq ft of accommodation, but it does not escape the market forces that influence decisions taken by private sector property holders.
The recent decision to buy Lansdowne House in Ballsbridge is a good example of this. The OPW took a 65-year lease on the 70,000 sq ft block in 1968 with a break-option in 2009. The rent was averaging out at £11 per sq ft and £800 per parking space but a rent review was looming in 2003. Rather than face the prospect of the rent more than doubling, to about £25 per sq ft, it decided in August last year to buy out the block for £23.5 million.
Prime sites in Dublin can now achieve £35 per sq ft and £30 is not an uncommon price. New suburban accommodation tops out at about £20 per sq ft and is often as low as £15. This has caused the OPW, when it has to provide space for an expanding Dublin-based department, to consider a short hop to the suburbs.
"Economically, there are huge advantages. The rent costs are still significantly better than in prime areas of the city," says the OPW's Tom Sherlock. He negotiates many of the contracts arranged for State accommodation.
"The OPW will certainly encourage them [Government Departments] to look at a suitable location in the suburbs." It is a matter of what is needed and what flexibility exists over a location away from the city centre. "It is their call."
It has leased space in Tallaght for the Revenue Commissioners and the Department of Agriculture. Space has also been taken on the Swords Business Campus.
Various Departments have, however, been reluctant to make the move out of central Dublin. "We haven't been hugely successful, but Departments are now looking actively at the suburbs much more than they would have before."
Some of the interest has been driven by staff. It is getting more difficult to commute into the city by car and promised transport alternatives are still years away. The commute would be shorter for many and parking would be less of a problem.
There is also the issue of quality of location, adds Mr Sherlock, an aspect "which would not have been the case" in the past. The parkland-style developments promised for the Sandyford/Leopardstown catchment area and the new Santry Woods development offer near-rural surroundings.
It could be argued that the OPW should consider buying sites in these and other new suburban developments, but Mr Sherlock dismisses this view. "We will always look at a site that might be strategic to us. We wouldn't tend to speculate on the property market," nor is the OPW "actively looking for sites" in the suburbs.
It is usually difficult to justify a speculative purchase, he said, and so the approach has been avoided. This did not mean, however, that the OPW would not take suitable sites if they arose.
It has acquired the formerly leased building and rear office block at 52 St Stephen's Green, formerly the Office of the Ombudsman, and conveniently right next door to the OPW's own headquarters. It holds lands at Hammond Lane which will ultimately be used for the court service and land registry and holds property for future development on Infirmary Road, John's Road, Harcourt Terrace and Castle Street.
The OPW is not waging a campaign to get Government offices to decamp to the suburbs. "The OPW at the end of the day doesn't have prescriptive powers," says Mr Sherlock. While it might make recommendations, this remains a Department's own call.
