OfficeInvestments: Green Property paid €72.6 m in 1999 for three blocks in Sandyford and another in South County Business Park. It has sold the Sandyford part of that deal for €40 million, reports Jack Fagan, Property Editor

A group of property developers led by Dublin businessman Paddy Shovlin has paid Green Property Company almost €40 million for Microsoft's former European operations centre on 12.5 acres at Sandyford, Co Dublin.

The investment is currently producing rents of over €2 million per annum but it is expected that the site will eventually be redeveloped for a mixture of retail warehousing and apartments.

The largest of the three office blocks with 10,358 sq m (111,504 sq ft) is occupied by Microsoft at a rent of €1,516,067 per annum. The smallest block with 2,268 sq m (24,423 sq ft) is partially occupied at a rent of €520,000.

Microsoft has six year break options on all the space and it has already moved out of the third block which has a floor area of 7,563 sq m (81,419 sq ft). The general expectation is that Microsoft will also vacate the two other buildings after moving most of its European hub operations to a new six-storey, 16,722 sq m (180,000 sq ft) building at the Green Property's Atrium office development a short distance away in Sandyford.

Green's decision to sell the older complex is hardly surprising given its continuing need to raise capital following its delisting from the stock exchange and also because it was holding more than €120 million in properties occupied by Microsoft.

Green originally paid €72.6 million at the height of the high tech boom in 1999 for the three blocks in Sandyford and another office building in South County Business Park in a sale and leaseback deal with Microsoft. The four investments accounted for 28,334 sq m (305,000 sq ft) of office space in all with the building in South County Business Park accounting for 8,361 sq m (90,000 sq ft).

Both the high tech business and the Dublin office market have taken a nose-dive since then and, with a huge volume of newly completed office space overhanging the market in the Sandyford area, Green had little hope of finding replacement tenants for the older blocks as Microsoft moved out.

New owners Landmark Developments will be taking a long- term view of the Microsoft campus after making a huge success of Beacon Court against all the odds. More than 18,580 sq m (200,000 sq ft) of office and health clinic facilities have been completed and sold at Beacon Court over the past three years at an end value of €95 million.

Landmark is likely to demolish the office buildings when they are vacated and seek planning permission for retail warehousing which is still in constant demand both from Irish and overseas traders. The opening of the Luas service and the completion of the M50 will improve accessibility in Sandyford.

Landmark is also expected to seek planning approval for several hundred apartments on the extensive site. It is close to the seven-acre Allegro redevelopment site acquired some years ago by Treasury Holdings. That company is rumoured to be trying to tempt B & Q to lease a large retail warehouse targeted for the site.

However, B & Q's strategy is more likely to be centred on south Dublin's first large scale retail warehousing park to be strategically located beside the Carrickmines Intersection of the M50.

As well as a huge range of retail warehousing, The Park will also have a large office element, two hotel, shops and restaurants when it is completed by Park Developments.

Planning permission has already been granted for the first phase of the scheme.