Spear Street Capital agrees rental terms for Cherrywood offices

Payment solutions company Elavon is understood to have entered into a pre-letting agreement for the entire Block F1 office building at Cherrywood in south Dublin, which is currently under construction and due for completion next year.

Elavon is believed to have agreed an annual rent in the region of €2.215 million for the offices on a 15-year term, likely making it the second biggest suburban letting of the year after Facebook's letting of the 15,939sq m (172,121sq ft) Nova Atria South offices nearby in Sandyford. Agents JLL, who acted for the landlord, refused to comment on the deal.

Block F1, which spans some 6,244sq m (67,210sq ft) gross floor area, is one of two office buildings planned by Spear Street Capital. The site is understood to have been acquired as part of a deal with Hines that included a number of existing office blocks at Cherrywood Business Park in an off-market deal under which Spear Street paid a reported €145 million.

Planning permission

When the site was acquired, it already contained a three-level basement and Hines secured planning permission for new office blocks to be built atop the substantial basement structure, which features 339 parking spaces. It is expected that Elavon’s annual rent includes a large number of those parking spaces. Last year, a nearby office known as Building 11 was quoting €1,500 per car-parking space.

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Elavon has occupied office space in Cherrywood for more than a decade and is currently based in Blocks 5 and 8 of the business park. Whether the company plans to vacate those spaces when its new offices are completed in order to consolidate its operations remains to be seen. The company made headlines earlier this week for agreeing to buy the payments services arm of Sage for £232m (€270 million).

Aside from the Cherrywood deal, another significant suburban office transaction has quietly concluded, according to market sources. Private health insurer and healthcare provider VHI is believed to have completed the acquisition of Park Developments' Hampstead Building at The Park, Carrickmines.

In 2017, ahead of completion of the office development, agent Savills advertised the 5,574sq m (60,000sq ft) block for rent seeking € 317.50 per sq m (€29.50 per sq ft).

However, it appears that the developer’s intentions changed over time as they allowed VHI to apply for planning permission last year for a change of use from office to healthcare. Initially, sources indicated that the deal was for the letting of the offices but it has transpired that VHI has acquired the building for an undisclosed sum. Agent Savills declined to comment on the deal.

At the time planning permission was sought by VHI, inquiries were made as to whether the substantial block might become a private hospital but a spokeswoman for the company confirmed that it intended to provide “enhanced Swiftcare” services at the property. VHI currently operates three Swiftcare clinics at Dundrum and Swords in Dublin and Mahon in Cork, and its latest acquisition at Cherrywood will supplement its healthcare offering.