22nd November (Issue 374)

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.



Savills Quarterly Report Take up totalled 1.3m sq. ft in Q3, more than double the level witnessed in Q3 last year and 45% above the five-year average for a third quarter. Furthermore, the year to date take up of 2.6m sq. ft.] is 27% higher than the five year average. Deals for big-box units (50,000 sq. ft and greater) are the explanation behind the massive take-up in Q3, accounting for 79% of total take-up this quarter. The largest deal of the quarter and the year to date, was the pre-letting of 206,000 sq. ft at Quantum Logistics Park to DHL.
Take-up of stock built this decade accounted for 74% of take-up in Q3, a significant increase compared to the prior four-quarter average of 45%. Legacy stock, on the other hand, continues to account for only a small portion of take-up, with firms citing corporate ESG requirements, size specifications, as well as refitting and energy costs as the main causes behind the weak demand for legacy units.
Q3 witnessed a rise in the vacancy rate to 1.4% from 1.0% in Q2, largely attributed to the big box unit in Belgard Square North of 105,050 sq. ft and the addition of 11 smaller, legacy units of less than 50,000 sq. ft. The increase in the number of vacant legacy units attests to the industry’s demand for modern stock. In total, there are currently 37 vacant units, of which only six were built after 2000.
Savills Dublin Industrial & Logistics Q3 Market Report

Cookstown Industrial Estate, Dublin 24 Industrial property specialist Harvey has secured the sale of a warehouse unit with future residential redevelopment potential at Cookstown Industrial Estate in Tallaght, Dublin 24 for more than €990k. Unit 73 briefly comprises a detached building extending to 17,233 sq. ft on a self-contained and gated 0.7-acre site. While the property is zoned “objective regen” under the draft South Dublin County Council Development Plan, planning permission for 64 apartments on the subject site was refused in April 2021 as it was deemed to be premature. The Irish Times, 16th November



Ranelagh Road, Dublin 6 Nos. 49 and 50 Ranelagh Road, which comprises 16 vacant en-suite guest rooms and studios along with a commercial premises, is being offered to the market by QRE at a guide price of €3.75m. The subject property extends to a total gross floor area of 9,900 sq. ft and occupies a site area of 0.235 acres. An established physiotherapy clinic practises from the hall and first floor of the front section of the property and has recently agreed terms, albeit subject to signing, for a new long-term lease. To the rear of the property there is a large, double-storey extension to the original building along with a spacious rear yard with surface car parking for up to 10 vehicles. The Irish Times, 16th November



Fitzwilliam Street, Dublin 2 One of the world’s leading global aircraft leasing companies has agreed terms to lease close to 140,000 sq. ft of space in a prime Dublin office building. SMBC Aviation Capital is set to conclude a subleasing space at Fitzwilliam 28, a 137,000 sq. ft office development in Dublin’s CBD that is owned by French investor Amundi Real Estate.
The building had been entirely prelet to Slack, the workplace collaboration specialist, in 2020. However, after the firm’s acquisition by Salesforce in 2021, it never took up occupation. Slack is relocating its entire operations to Salesforce’s new European headquarters in the Docklands.
Amundi Real Estate paid ESB, Ireland’s largest utilities company, €180m for Fitzwilliam 28. The acquisition represented a net initial yield of close to 4%. Savills is advising SMBC Aviation Capital. Cushman & Wakefield is representing Slack on the subletting deal. ReactNews, 17th November

Grand Canal Dock, Dublin 2 BidX1 is guiding a price of €2.95m for a fully let office investment at Grand Canal Dock. The subject property comprises a modern office space located on the ground floor of a residential apartment block. The own-door property extends to 5,941 sq. ft and comes with the benefit of four dedicated basement car-parking spaces. While the office was let initially to MCA Architects on a 10-year lease starting in June 2015, the terms of that agreement have since been renegotiated, extending the lease to May 2027. The property generates €209.9k from the office and €11k from the car-parking spaces. The Irish Times, 16th November

Grand Canal Square, Dublin 2 Meta, the parent company behind Facebook, Whatsapp and Instagram, is vacating its European headquarters in 4-5 Grand Canal Square four years before its agreed break date. Meta signed a lease agreement for 250,000 sq. ft. of the prime Dublin Docklands real estate in 2015 and had an agreed break date of early 2027. The estimated rent on the buildings is €54 per sq. ft, working out at €13.5m pa. According to market sources, employees currently based in the Grand Canal office will move to its new campus in Ballsbridge in early 2023, once the next phase of the development is completed. Union Investment Real Estate, who owns 4-5 Grand Canal Square and is the investment arm of DZ Bank, purchased the Grand Canal Square buildings in 2015 for €232m from Nama. The Currency, 16th November

Citywest Business Campus, South-West Dublin Henley Bartra, the joint venture between UK investor firm Henley Investment Management and Bartra Capital, has secured two new lettings and a lease extension in the Riverwalk Office Park at the Citywest Business Campus in Dublin. Digital services and consulting specialist Infosys, and Parker Hannifin, a leader in motion and control technologies, have both agreed new 10-year leases for a total of 11,800 sq. ft of space at the scheme. In addition, long-standing tenants Clanwilliam Healthcare, a developer of software for healthcare professionals, has agreed to extend its lease term on the 11,000 sq. ft floor it currently occupies until June 2036. The Citywest Business campus comprises a total of 369,000 sq. ft of modern office space, with lands capable of accommodating a further 100,000 sq. ft The Irish Times, 16th November

Albert Quay, Cork Docklands French investor Corum Asset Management is offering the final two floors at Navigation Square 1 (NSQ1) in Cork city’s docklands to the letting market. Located on Albert Quay, the first and second floors of the building comprise 33,364 sq. ft of grade A office space with floor plates ranging from 14,851 sq. ft-18,513 sq. ft along with 30 on-site secure car-parking spaces. The offices are expected to quote a rent of c. €35 per sq. ft. The subject property is a seven-storey over double-basement carpark building extending to 120,000 sq. ft. The ground floor and third to sixth floors are occupied by Deutsche Börse Group through its post-trade services arm, Clearstream. The building, which was developed in 2018 by O’Callaghan Properties as part of its wider Navigation Square scheme, was acquired by Corum for €60m in 2021 on behalf of its fund, Corum XL. The Irish Times, 16th November



Douglas, Cork KC’s takeaway in Douglas is quietly up for sale seeking €2m. With a constant queue outside its door, the well-branded business (1,076 sq. ft) is dwarfed size wise by its neighbour — the Douglas Village Shopping Centre to its rear. KC’s turnover is not disclosed in the sale prospectus, issued by selling agent Gerard O’Callaghan of ERA Downey McCarthy but well-placed sources familiar with the offer confirm a price expectation of c€2m, and say the turnover is on a similar scale, over €2m pa, or c€40,000 a week. Described as “exceptionally valuable and exceptionally profitable,” it is understood that the Crawford family is interested in a sale, or in a possible partnership. The family has not commented publicly on their sale plans.
Among those who have so far shown an interest are takeaway/food operators well outside of Cork, including from Dublin, attracted both by the turnover and the chances of opening other outlets with the same menu and immense brand loyalty. The Examiner, 16th November



Churchtown, South Dublin Distributed across three buildings – namely Ely Hall, Ardavon Hall and Newtown Hall – the Hazelbrook Square scheme at Churchtown in South Dublin comprises 54 units and is being offered for sale by TWM at a guide price of €20m (NIY 5.11% and c. €370k per unit). The investment consists of 23 one-bedroom apartments, 28 two-bedroom apartments and three three-bedroom apartments ranging in size from 519 sq. ft to 1,335 sq. ft. The subject units form part of a development of 97 apartments and 96 houses within the wider Hazelbrook Square development. While the portfolio’s current overall rent roll of €1.067m pa is 19% higher than the €896k the investment had been generating when the current owner acquired it from Nama-appointed receivers Mazars for €18.25m in 2019, the rents are once again generally below market level. The Irish Times, 16th November
For lending terms on this asset please contact rossmetcalfe@origincapital.ie

Waterford Portfolio BidX1 is guiding €2.5 million for a multi-unit residential portfolio in Co Waterford comprising eight houses and five apartments, all of which are let to Waterford City and County Council on 25-year leases. In total, the properties generate €150,210 in rental income per annum, with the guide price reflecting a gross yield of 6%, or 5.4% based on Net Operating Income of €140,455. The leases are HICP-linked (Harmonised Index of Consumer Prices), with three-yearly rent reviews.
All but two of the units are located in Waterford City or its suburbs, along with a three-bedroom house in Dungarvan and a four-bedroom house in the village of Aglish, near Cappoquin. The properties are in good condition, having been fully refurbished prior to lease commencement in November and December 2021. Business Post 20th November
For lending terms on this asset please contact rossmetcalfe@origincapital.ie

Wilton, Cork A residents’ association has complained that an affordable housing body is “locking out” individual private home buyers by buying an entire housing estate. Respond, a housing association, received state funding to purchase all 69 homes in the Sarsfield Heights estate, which is currently under construction in the Cork city suburb of Wilton, for social housing.
The Eagle Valley Association told the Business Post that Respond’s purchase of the entire estate was “locking out” first time buyers, such as long-term renters with families growing up in the area. The group has also warned that with over 70 per cent of the 301 houses in the Eagle Valley area already in the rental sector, the opportunity to rebalance the area with more owner occupiers is “significantly undermined”. It has also warned that having a “mono social housing estate” in the area is contrary to the government’s own policy of having a housing mix of owner occupiers, renters and social housing. However, it said that its members were not objecting to social housing.
A spokeswoman for Respond said it had purchased the Sarsfield Heights site and funded the construction of the entire 69 homes through a fixed-price agreement with O’Brien O’Flynn, the construction firm. “The scheme would not be built without this partnership, and the participation of Respond,” she said. Business Post, 20th November

Construction New housing construction in Ireland slowed again in October, with 1,841 units commenced last month. This was down 31pc year-on-year. The total of annual commencements to October stands at 26,608, down from a peak of 35,000 recorded earlier this year. According to Goodbody Analytics, recent trends suggest that housing output may now stall around the mid 20,000 mark over the next 18 months.
Apartment construction has been impacted by increased construction costs and yields. Housing construction has been strongly impacted by other factors, such as land availability. “With a change in positions at the top of government imminent, reports at the weekend suggests that there will be a renewed effort by the government to address the large supply issues in the market in the final two years of its term,” according to Goodbody Stockbrokers chief economist Dermot O’Leary. Irish Independent, 21st November

Hooke & MacDonald Report According to Hooke & MacDonald, a total of €1.25bn was spent by investors across 22 main PRS transactions in the first three quarters of this year. €232m was invested in the first quarter while the second and third quarters saw sums of €437m and €597m being spent respectively. The PRS sector continued to be the top investment asset class in Dublin and the Greater Dublin Area (GDA) in the first three quarters of 2022, capturing 37% of the total €3.5bn investment spend, followed by offices at 30% and industrial at 12.5%. However, in the third quarter of the year, this order was reversed – with offices taking the lead with 43% of the total €1.7bn spend, driven to a large extent by the €500m paid by Blackstone for Salesforce’s newly developed European headquarters. As a result, the PRS’s market share fell to 36% during this period while the industrial and logistics sector fell back to 4%. Investment in retail fell to 1% in the first three quarters of 2022, compared with 47% in the whole of 2016.
The report also notes that according to Eurostat, Ireland has the lowest level of apartments in Europe. Only 9% of housing in Ireland are apartments. Croatia is the second lowest with 21.7% living in apartments. The highest is Spain with 66.1%. The average for Europe is 46.3%.
The report further notes that the National Planning Framework’s (NPF) population projection provided for a net in-migration of just 8,000 per annum for the first five years and 12,500 per annum thereafter. For the first six years of the NPF to April 2022, this would equate to 52,500. The preliminary 2022 census confirms that for this period the State had a net in migration of 190,333. Accordingly, the NPF’s in-migration is just 27.58% of what has occurred – a six year deficit of 137,833. Hooke & MacDonald Residential Investment Bulletin, November 2022

Daft.ie Report The company’s latest quarterly rent report indicated that market rents nationally were on average 14.1% higher in the third quarter of this year than they were in the same period of 2021.
This was the highest level of annual rent inflation recorded by Daft since it started reporting on the market here in 2006. Daft said there were just 1,087 homes available to rent on its website on November 1st, down about 25 per cent on the same date last year. In Dublin, the shortage of available rentals was even starker with just 345 homes listed for rent at the beginning of November.
“Over the past 20 years, the best predictor of future changes in rents is the number of homes available at any particular point in time,” the report’s author and Trinity College Dublin academic Ronan Lyons said. Since the introduction of Rent Pressure Zones in 2016, rents of sitting tenants have increased by 17 per cent on average, compared to an average increase in open-market rents of nearly 75 per cent over the same period.
Mr Lyons also queried Government plans to scrap the current build-to-rent (BTR) planning classification, noting the BTR system had “helped generate a pipeline of tens of thousands of new rental homes that are now coming on stream and represent the best hope for alleviating the chronic shortages in the rental market. If the BTR system is to go, policymakers must have a clear plan on how tens of thousands of new rental homes will be delivered this decade in all major towns and cities.” Irish Times, 22nd November


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