18th October (Issue 369)
Welcome to the Origin Capital Weekly Irish Property Review. This update is designed to provide you with a full recap of the latest property news from the media over the last seven days.
OFFICE
Lord Edward Street, Dublin 2 JLL is guiding a price of €8.8m (NIY 6.1%) for No. 14-16 Lord Edward Street, an attractive property comprising nine office suites in the heart of Dublin City Centre. The proposed sale of the property comes seven years on from its acquisition for €7.1m by its current owner, an American investor. The price paid on that occasion represented a 16% premium on the building’s then guide price of €6.1m. At the time the investment had a WAULT of 2.09 years and total rental income of €458k pa. Presently, the WAULT is 5.17 years and the annual rental income is €589k pa. Local authority/State-backed bodies account for c. 68% of the overall rent roll. The subject property comprises a period building converted into contemporary offices in 2007. The accommodation extends to a total floor area of 14,156 sq. ft. across nine office suites and has a lift serving all floors. The office suites range in size from 845 sq. ft. to 3,067 sq. ft. The current tenant line-up includes the Irish Film Board, Dublin City Council, Grad Ireland, and Heneghan Peng Architects. The Irish Times, 12th October
For lending terms on this asset please contact rossmetcalfe@origincapital.ie
IFSC, Dublin 1 With the final phase of a staged refurbishment due for completion shortly, State Street subsidiary New Ireland Assurance is seeking tenants for the remaining office space at 5 George’s Dock in Dublin’s IFSC. Joint agents Savills and Quinn Agnew are quoting €55 per sq. ft. for the accommodation which is capable of catering for companies seeking between 2,800 sq. ft. and 30,000 sq. ft. No. 5 was acquired by State Street for just under €40m in late 2014. The Irish Times, 12th October
Sandyford, Dublin 18 FJ Frisby & Associates has brought the Private Office Collection to market with an overall guide of €4.1m, however, the lots can be acquired individually. The properties include three suites within the Apex Business Centre. Suite B is currently vacant and has a guide price of €900k. Suite C is occupied by Mediterranean Shipping Company Ireland Ltd. It has a current passing rent of €85k pa and a guide price of €1.2m. Suite D is tenanted by P J Carroll & Co. The current passing rent is €60.1k pa and the guide price is €850k. The next office is located in the Beacon South Quarter. Known as Suite 22 The Cubes Offices, it has a guide price of €350k. The final unit is let to Brazilia Salon Ltd and comes with a guide price of €750k. The Business Post, 15th October
City Quay, Dublin 2 Dublin City Council has rejected plans to build a 24-storey, office-led tower on the site of the former City Arts Centre. Ventaway, a company run by developer David Kennan and Winthrop engineering group founder Barry English, proposed the development at City Quay, Dublin 2, which could have delivered the tallest building in the Irish capital. The 243,124 sq. ft. project included office space, artist studios/workshops and exhibition space, as well as 11 parking spaces and 424 bicycle spaces. David Kennan’s KC Capital bought the site in July 2021 for €40m. Ventaway has one month to file an appeal against the decision. React News, 13th October
Government Office Energy Rating Figures released by the Office of Public Works show that just one of 238 office buildings occupied by Government Departments and agencies has achieved an A rating for energy efficiency. The building with an A rating being the Revenue Warehouse in Limerick which scores an A2. Just 38 of the 238 buildings have a B rating and, of those, only two have a B1 rating. In contrast, 14 offices and buildings have energy ratings of E or less. Of those, six have an energy rating of G. The OPW said the standard used to measure energy efficiency in its buildings was the more exacting Display Energy Certificate (DEC) which measured “actual” consumption over a 12-month period. In a statement the OPW said that as of January 2022, 58% of its buildings were C3 or better, compared to 60% of OPW buildings being D1 or worse when the energy efficiency campaign was first introduced in 2008. The OPW said 120 energy retrofits have been completed in its buildings since 2008, mainly involving upgrades of lighting, heating and control systems. Average energy savings of over 25% have been achieved through this initiative, it said. The Irish Times, 17th October
RETAIL
Gorey, Co Wexford A private pension syndicate has paid €9.35m (NIY 8.95%) for Gorey Shopping Centre. Built originally in 2007, the Wexford scheme is generating NOI of €920k pa. The sale is understood to have been brokered in an off-market transaction on behalf of US investment group Davidson Kempner by Bannon. Davidson Kempner acquired Gorey Shopping Centre for its part in 2015 as part of its wider €118m purchase of the Cornerstone Portfolio – a collection of six provincial shopping centres distributed across six counties. Gorey Shopping Centre briefly comprises a single internal mall and is anchored by one of the largest Dunnes Stores in the southeast (61,209 sq. ft.) offering grocery, clothing and homeware products. The shopping centre has 22 retail units in total with three of these at first-floor level and one at basement level. The Irish Times, 12th October
Ashbourne, Co Meath Ashbourne Retail Park in Co Meath has signed up 10 deals in the last 18 months, the latest of which is Burger King which has opened a new drive thru restaurant which will be operated by Applegreen. Another restaurant and take away, Camille, is currently fitting out. Leisure Dome, a new state-of-the-art 32,291 sq. ft. family entertainment centre, opened in June beside Go Gym and Vue Cinema. Asset manager Wilson Wright says the 10 deals bring occupancy to 91%. Two units, suitable for a variety of uses, are available, ranging from 4,994 sq. ft. to 7,997 sq. ft., quoting a rent of €14 per sq. ft. The Irish Independent, 13th October
Dublin and Cork The offers for Debenhams’ former flagship premises in Dublin and Cork are understood to have come close to meeting the guide prices of €55m and €20m set by Cushman & Wakefield. In the case of the Henry Street store, Frasers Group and Swedish furniture giant Ikea are understood to be among several parties in the mix for the property. As part of this sale there is an existing licence with Zara which has traded on the site since 2003. It occupies c. 19,999 sq. ft. at ground and second floor level with additional storage on the third floor. The sale of Debenhams’ former site in Cork city, meanwhile, still has at least five parties in the mix. The Irish Times, 12th October
Merchant’s Quay Shopping Centre, Cork A dispute about Dunnes Stores’s alleged failure to reopen one of its anchor shops after the repeal of Covid-19 rules directing the closure of non-essential retail outlets may be resolved later this month, the Commercial Court heard on Monday. The owner of Merchant’s Quay Shopping Centre in Cork, Phyluma Ltd, has sued Dunnes Stores (Georges Street) Unlimited Co claiming it is in breach of a “keep-open” clause in its anchor tenancy for a Dunnes clothing outlet at the centre. Dunnes denies it is in breach of the agreement. Phyluma claims that notwithstanding the permanent lifting in May 2021 of the Covid era prohibitions on non-essential outlets, Dunnes has “failed without meaningful explanation” to reopen Merchant’s Quay. It also says Dunnes removed all of its stock from the unit and this has left it in “an obviously vacant state which is unattractive” for customers and the smaller tenants in the centre. The Irish Times, 17th October
HOSPITALITY
Hotel Sector, Ireland Aiden Murphy, a corporate recovery expert with the accountancy firm Crowe Ireland, expects 30 to 40 hotels to become insolvent in 2023. Higher operating costs, falling profits, mounting liabilities and the withdrawal of government support measures introduced during the Covid era leave smaller businesses without protection and unable to pay down debt. Tax debt warehoused during the pandemic is due for repayment from next May. Since these establishments lack scale, they must choose either to give over all their rooms to the government-funded accommodation scheme, which provides housing for Ukrainians and other refugees, or operate the establishment solely on commercial lines. Top-end and five-star establishments remain in robust health, according to Murphy, boosted by a “punchy increase in room rates”. The Sunday Times, 16th October
Exchequer Street, Dublin 2 Pan-European investor Deutsche Finance International and real estate manager BCP Capital have joined forces to open Ireland’s first Hoxton in Dublin City Centre. The duo inked a long-term agreement with lifestyle hospitality firm Ennismore to operate the Central Hotel under the Hoxton brand. Acquired by DFI and BCP in 2019, the Central Hotel is located on Exchequer Street. Redevelopment of the hotel has begun in the second quarter of the year, financed with a loan from a fund managed by an affiliate of Apollo Global Management. The Hoxton in Dublin is targeting a 2024 opening, which will unveil the expanded bar, night venue and restaurant space. React News, 17th October
MIXED-USE
Thomas Street, Dublin 8 Oakmount, headed by Paddy McKillen Jr, has sold a fully let, mixed-use building in Dublin city for c. €13.4m. That’s a discount of c. €1.3m on its €14.75m asking price. Press-Up Group, operates John’s Bar & Haberdashery on the ground floor of the property, Sixty One Thomas Street, Dublin 8. The 16,614 sq. ft. property also includes four fully-let floors of grade-A office accommodation and is generating total annual rent of €810.2k. Tenants include Lumen Technologies, Digitize New Media and McCann Advertising and the WAULT averages c. seven years. The Irish Independent, 12th October
HEALTHCARE/ NURSING HOME
Ranelagh, Dublin 6 The Northbrook Clinic in Ranelagh, which is fully let and producing rental income of c. €330k pa, is being offered to the market by joint agents Knight Frank and North’s Property for €5m (NIY 6%). It is understood that VAT is not applicable to the freehold sale of the asset. The subject property comprises a three-storey detached Gothic Revival-style building and extends to 10,005 sq. ft. The Irish Times, 12th October
RESIDENTIAL / DEVELOPMENT
Planning System, Ireland A number of property developers are taking legal advice on whether to initiate High Court cases against An Bord Pleanála over failures in the planning system. If they proceed with the actions, they will be seeking, among other things, compensation to cover planning fees and the accumulating finance costs associated with delayed planning permissions. The property developer Pat Crean is thought to be among those taking legal advice after the board last week conceded a judicial review of permission it had granted to his company Atlas GP for 255 apartments in Killiney. An Bord Pleanála has faced a growing number of actions over the past three years. Of the 95 cases taken against it in 2021, 47 were associated with strategic housing development approvals. According to market sources, the board has paid out €1.05m this year in fines to developers over the backlog in processing applications. The board was liable to pay €10k to developers if it took more than 16 weeks to make a decision on fast-track applications. It made 105 payments to 84 developers. The Sunday Times, 16th October
Thomas Street, Dublin 8 Ireland’s Land Development Agency (LDA) has revealed its masterplan for the redevelopment of the Digital Hub complex in Dublin 8. The proposal outlines the construction of more than 500 social and affordable homes on the 9.2-acre site off Thomas Street in the Liberties. The development, to be called Pear Tree Crossing, will include the renovation and reuse of several protected and historic buildings on the site. The Digital Hub lands are among the 5.6 acres of land identified to be transferred to the LDA from the Digital Hub Development Agency (DHDA). The site has been divided into four plots – School Street, Watling plot, the St Patrick’s Tower site and the Vat House 7 plot. The LDA has launched an online public consultation on the masterplan and intends to submit an initial planning application in 2023, with phased completions of the project to begin in 2024. Construction of the apartments will begin after 2025. React News, 17th October
Housing Construction, Ireland To meet its climate targets the State may need to limit the construction of new homes to just 21,000 units a year, significantly below the current construction rate (expected to be 25,000-28,000 this year) and significantly below the 33,000 units envisaged under the Government’s Housing for All strategy, a new report has indicated. The study by the Irish Green Building Council (IGBC) considers how Ireland’s construction and built environment sector might reduce emissions by 51% by 2030, the target set out in the State’s Climate Action Plan. Currently the sector accounts for 37% of the State’s carbon emissions, the same as agriculture. 23% are generated from operational emissions associated with the energy households and businesses use to heat, cool, and light their buildings, with the remaining 14% coming from what the report describes as embodied carbon, the emissions associated with the construction of the building in the first place. The Irish Times, 13th October
Finglas, Co Dublin Dublin City Council has initiated High Court action against An Bord Pleanála over its decision to grant a large-scale build-to-rent scheme in a regeneration area, against the council’s strong opposition. The council is seeking a judicial review of the board’s approval of 314 build-to-rent apartments at former industrial lands in Finglas, in an area designated for more than 2,000 new homes. The board last August granted permission to Jamestown Village Ltd for the build-to-rent scheme of five apartment blocks rising to six storeys at Jamestown Road industrial estate in Finglas, Co Dublin. The Jamestown industrial estate was in June 2021 rezoned to facilitate its “rejuvenation” as a residential and enterprise zone and its designation as a Strategic Development and Regeneration Area. The Irish Times, 14th October
Planning and Building Process Taoiseach Micheál Martin has expressed frustration at the slow pace of the planning and building process and the failure of the system to respond swiftly to innovation. The Taoiseach acknowledged that the system was too slow given the nature of the current crises in housing and refugees, adding that the system for accommodating students could also be improved. The Irish Times, 13th October
Housing Assistance Payment (HAP) Scheme Just 35 properties were available to rent by people reliant on the HAP scheme in September, according to a report from the Simon Communities of Ireland. This represents the lowest number ever recorded in the “Locked Out of the Market” quarterly reports by the Simon Communities. More than 60,000 tenancies were subsidised through HAP in 2021, according to the CSO. For the first time, the report found no properties available to rent within a standard HAP rate. The 35 properties available under a discretionary limit in at least one of the four categories is two less than the 37 HAP properties available in the June 2022 study and 81.7% less than the 192 which were available one year previously, in September 2021. The 35 properties within HAP limits were predominantly available in Dublin (23) while outside of Dublin, nine of the 16 study areas had no properties available to rent in any household category within standard or discretionary HAP limits. The Irish Times, 17th October
If you have an article which you would like to have considered for inclusion in our next weekly report, please contact us at info@origincapital.ie