An eight-storey office building under construction at the corner of Grand Canal Street and Clanwilliam Place in Dublin 2 has been bought by Irish Life for a figure in the region of €58 million.
The surprise deal almost six months before the block is due to be completed will be seen as a further indication of Irish Life’s belief that there will be a pent up demand for more office blocks next year following the Brexit vote. Irish Life is one of the largest office landlords in the city.
The new glazed building to be known as Velasco is being developed by Ardstone Capital (an independent investment management company) on behalf of CBRE Global Investment Partners. The construction is being handled by Mark Kavanagh's Hardwicke Ltd which recently returned to the Dublin construction market after an absence of 14 years.
The 4,738sq m (51,000sq ft) block is being built on the site of Kestrel House, a 1980s building overlooking the Grand Canal which was demolished after being sold by quantity surveyor Bruck Shaw for around €10 million.
Pivotal location
The new development will be finished to a Leed Gold standard and a BER A3 rating and will have 13 car-parking spaces at basement and podium levels. Floor plates will have an ideal size ranging from 475 to 725 sq m (5,100 to 7,800 sq ft).
John Moran of agents JLL, who advised Ardstone and Hardwicke, said the price achieved was reflective of both the quality of the building and its pivotal location at the axis of the traditional city core and the south docks.
The off-market sale of the Velasco investment is understood to have been of interest to a range of overseas and domestic buyers.
However, Irish Life was quick to move on what could well prove to be one of the highest quality office investments in the city. JLL, who are also acting as leasing agents, are reporting strong occupier interest in the block.
Ian Gleeson of CBRE GIP said they identified the original offices on the site “in late 2012 as attractively priced” and moved to gain exposure to the market. “At the same time we recognised that with the recovering Irish economy there was an emerging requirement for new Grade A space to facilitate the growing domestic and international occupier base. With the Velasco development we have been able to deliver, into a supply-constrained market, a high quality building which is attractive to modern occupiers and long-term core buyers. We selected Ardstone Capital as best-in-class local operating partners for this high profile and important project and are very pleased with the outcome.”
Martin O’Reilly, head of property at Irish Life, said that after many years of no new development stock being constructed, the first schemes were now coming out of the ground and changing the landscape of Dublin’s skyline.
This acquisition represented another active "enhance to core" play by Irish Life in the central Dublin office market. Other notable examples included the ongoing development of 1GQ at George's Quay and the refurbishment of 2-4 Merrion Row following the successful refurbishment and releasing projects such as George's Dock in the IFSC and 30 Herbert Street.
Johnny Horgan of CBRE, who advised Irish Life on the Velasco deal, said prime yields were stable at 4.65 per cent and rental growth had been a feature of the market with prime headline office rents now in the region of €645 per sq m (€60 per sq ft) supported by continued occupational demand.
