With leases having over nine years to run, Cumberland House will probably be bought by investors or developers with a long term strategy either to enlarge it or redevelop the site, writes Jack Fagan.
The commercial investment market continues to gather momentum with the forthcoming sale of a high quality office investment just off Merrion Square in Dublin 2.
Agents Palmer McCormack is seeking over €65 million for Cumberland House, a large detached seven-storey over basement office block at Fenian Street which is let mainly to Eircom plc.
The T-shaped air conditioned building is currently producing €4.119 million per annum, reflecting an average rent of €30.45 per sq ft (€325.75 per sq m) and €3,000 for each of the 213 car-parking spaces.
With the main office leases having over nine years to run, the likelihood is that Cumberland House will be bought by investors or developers with a long term strategy either to enlarge it - there is an existing planning permission for a substantial extension - or to redevelop the entire site for possibly a mixed office and residential scheme.
At a value of €65 million, purchasers would get a net return of 5.7 per cent until they are ready to embark on a larger project.
The close proximity to Pearse Street DART station and Merrion Square will be a strong selling point.
The building has a floor area of 10,485 sq m (112,863 sq ft) and occupies a site of 0.66-hectares (1.64 acres). The planning permission provides for a standalone or a linked five-storey building at the front with an additional floor space of 2,770.93 sq m (29,826 sq ft). There is also scope to develop further space over the podium car-park at the rear.
Cumberland House was built in 1977 and provides open-plan accommodation. Most of the next round of upwards-only rent reviews are due in a little over three-and-a-half years. The main tenant, Eircom, accounts for 84 per cent of the entire income with Fingal County Council responsible for 13 per cent and others, including the Office of Public Works, making up the final 3 per cent.
Joe Bohan of Palmer McCormack says the existing plot ratio is on the low side at 1.89 and the architects estimate that this would increase to only 2.53 with the construction of the new building to the front.
The alternative to this in-fill approach (building to the front and the rear) would be to capitalise on the size of the site and its location beside transport nodes and redevelop the cleared site once the leases run out. If a plot ratio of 3.5:1 was achieved, this would reflect a development of 23,225 sq m (250,000 sq ft).
