With a scarcity of debt financing about, three interconnecting period office buildings will test the strength of the investment market, writes JACK FAGAN.
THREE GEORGIAN-STYLE office buildings going for sale today in Dublin’s Harcourt Street will be another test of the commercial property investment market which has been seriously hit by the banking crisis.
Commercial agent HT Meagher O’Reilly is seeking offers over €12.5 million for the three houses which were originally used as the headquarters of the Industrial Credit Company.
The sale follows the ending of a long running dispute between solicitor Ivor Fitzpatrick and property developer Paddy McKillen. The houses are being sold on the instructions of Mr McKillen.
The four-storey over basement office block extends to 1,883sq m (19,730sq ft) and has been vacant for some time. The number of car-parking spaces on site – 27 – is significantly higher than usual on the street.
The three interconnecting buildings include large Georgian-style rooms which link in to open-plan offices at the rear.
James Meagher of the selling agent says the property should be of interest to professional firms with over 100 employees as well as software companies looking for a high quality working environment. “This is a unique opportunity to secure a building with a good profile in the heart of Dublin’s commercial district.”
He said the property represented real value for money at about €6,243 per sq m (€580 per sq ft).
The availability of the Luas service in front of the building is likely to be a strong selling point.
The sales campaign is being launched at a time when few commercial properties have been selling because of the scarcity of debt financing. However, selling agents are now reporting a resurgence of interest by cash-rich buyers following the repricing of office and retail investments over the past year. Prime office investments are now showing returns of over 7 per cent while retail investments are expected to change hands at yields of over 6 per cent, depending on the strength of the tenant.
However, retail buildings on Dublin’s Grafton Street are still difficult to shift despite the slightly higher yields being offered by vendors. Only last week, Marks Spencer decided to take the newly opened Tommy Hilfiger store off the market because of the banking crises and the failure to sell it over the past five months. The British multiple had been seeking around €30 million for the store which is rented at €1.672 million per annum. At that price it would have shown a return of 5.25 per cent. Some investors claim that the store is over-rented.
The same selling agent, CB Richard Ellis, is currently in negotiations to sell an office investment, Hambledon House, at Pembroke Street in Dublin 2. Irish Life had been hoping to get over €30 million for the five-storey mock Georgian office.
It is also looking for buyers for two other office investments, Wilson House on Fenian Street and an office block above the Merrion shopping centre in Dublin 4. There has been little interest in these two investments.
Irish Life’s decision to brave the abysmal market conditions follows an upsurge in redemptions by retail investors at its unit linked funds. Several other institutions, including Hibernian and Canada Life, are also anxious to offload property investments to reimburse retail investors.
