Rents for IFSC offices rise 5.6% in first review

THE two largest office tenants in Dublin's International Financial Services Centre are to pay rent increases of 5.6 per cent under the first rent review in the Custom House Docks.

Solicitors McCann FitzGerald and accountants Arthur Andersen have agreed to pay an extra £1.25 per square foot on top of the original rent of £22.50 for numbers and 2 Harbourmaster Place. The cost of car-parking spaces has been increased from £1,000 to £1,250 per annum.

The rent increase for the office space is somewhat lower than expected because similar air-conditioned space in the IFSC is generally letting at £27.50 per square foot.

The owners of the two 60,000-square-foot blocks are understood to have sought between £26 and £27 per square foot.

The claim was resisted on the basis that both companies occupy such a large volume of space and the fact that they are now halfway through a 10-year period in which they can claim double rent allowances. The leases on both blocks run for 35 years, 10 years more than the standard leases in the IFSC.

When the rents are next reviewed in five years' time, they are expected to revert to the open market level to coincide with the ending of the tax breaks. The tenants will also be liable to pay rates for the first time from 2001.

The Arthur Andersen block is owned by Irish Permanent while the second block is owned by a company controlled by businessmen Martin Naughton and Loughlin Quinn. The owners have been able to avail of a valuable tax shelter since buying the buildings in 1991 for around £18 million each. Each of the blocks will be producing rents of slightly over £1.5 million from now on.

McCann FitzGerald has sub-let part of its building to two German banks while a section of the Andersen block is sublet to the Gandon Fund Management.

Lisney handled the negotiations for the two tenants and the owners were represented by Harrington Bannon.

Meanwhile, the first stage of the custom House Plaza, a 183,000-square-foot block being developed in the IFSC by a company headed by Brian Rhatigan, is due to be completed in June. The first block of 42,000 square feet has been designed as the flagship of the scheme and will be occupied by ABN Amro, the Dutch bank which owns Riada stockbrokers.

The Hardwicke/British Land consortium had exclusive developments rights in the IFSC until Mr Rhatigan's company acquired the former Sheriff Street sorting office.

The Lisney agency is understood to have agreed terms to let at least half of the remaining space to licensed traders. The accommodation will be available on a staggered basis up to the end of this year. The new tenants will be paying £27.50 a square foot for space.