State avails of healthy finances to buy £6.45m office block

THE Government has availed of the healthy state of the public finances to buy a modern office block in Brussels for £6.45 million. The 31,000-square-foot building is used as the headquarters of the permanent Irish representation to the European Union.

The block has a high-profile glazed curtain wall facade and it occupies a premier position in the centre of the EU administrative area - the Quartier Leopold. It is located along Rue Froissart, opposite the new Consilium Building, and between the European Parliament complex and the European Commission headquarters.

The Government originally leased the nine-storey building under a nine-year lease from January, 1996, at a rent of £495,000 (£14.77 per square foot). The rent was index-linked but the Office of Public Works succeeded in securing an option to purchase the block outright. The option was exercised after protracted negotiations with the owners, IMMO Froissart SA, because the State would have had no automatic rights of renewal of the lease under Belgian law and might well have had to seek alternative accommodation in a less strategic location. The building has parking for 36 cars in the basement.

The purchase price equates to a return of 7.15 per cent, according to Tony O'Loughlin of Jones Lang Wootton, who handled the acquisition with the help of his company's Brussels office.

The OPW has also taken advantage of the buoyant public finances to acquire a number of office blocks occupied by State agencies in Ireland - the first time it has done so for almost a decade.

in Last November, the State paid excess of £4 million for the Iascaigh Mhara headquarters overlooking Dun Laoghaire Harbour, Co Dublin. With BIM committed to a lease which had another 20 years to run at a current rent of £322,000 per annum, the OPW opted to acquire the building not only because of strong Exchequer returns but also because of the exceptional low interest rates available. For the same reasons, the OPW also spent £2.7 million on the purchase of Goldsmith House, a modern office building at Pearse Street, and £1.37 million on 7 Merrion Square, which is occupied by Bord na Gaeilge.

The OPW's future strategy on State-occupied office buildings which come on the market is likely to be dictated by the length of the leases to which it is committed.