With a wide range of developers looking for office sites in Dublin’s south inner city, Savills has shown perfect timing in offering for sale a key development opportunity off Merrion Square.
The site at Fenian Street has full planning permission for a high density office block with a net floor area of 24,805sq m (267,000 sq ft) and 73 car parking spaces.
Mark Reynolds of Savills is guiding in excess of €50 million for the 1970s Cumberland House which was rented over the years by Eircom until it moved to new headquarters opposite Heuston railway station.
The seven-storey building, owned by Westmeath developer Christopher Bennett and his family, has been only partially occupied in recent years and is to be sold with vacant possession. The block stands on a site of 1.64 acres and has a net internal floor area of 13,564sq m (146,000sq ft) and 213 car parking spaces.
Reynolds says there is a “frenzy” among developers looking for well-located office sites. There was no risk involved with the Cumberland site because of the ready-to-go planning permission in place and the fact that the consent had recently been extended to 2017.
The forthcoming sale is broadly similar to one last June when developer Johnny Ronan and a UK partner bought a site with planning permission in place beside the Burlington Hotel for €40.5 million.
The partnership is due to begin construction shortly on a high-quality development extending to 15,384sq m (166,668sq ft).
With rents for Grade A properties already shooting up to between €484 and €538 per sq m (€45 and €50 per sq ft), two separate construction projects under way at the former Canada House on St Stephen’s Green and the old Veterinary College in Ballsbridge are expected to set the tone for the next round of rent increases.
Newly rented space Cumberland’s location just off Merrion Square and within easy walking distance of the Pearse Street Dart and train station and the St Stephen’s Green Luas service will make it popular with commuters.
Companies planning to pitch for the development site will be aware that take-up of office space in the city is expected to reach 200,000sq m (2,152,760sq ft) by year end, the highest level of activity for six years. About 71 per cent of the newly rented space in the first six months was in the city centre. Reynolds says that the combination of strong occupier demand and tight supply was a recipe for rental growth even though rents had already increased by about 30 per cent in the past 12 months.
Because of this many investors, including Reits, had turned to development opportunities to generate a better return on their capital given the recent compression of investor yields.
Very few development opportunities of this quality had been offered to the market, he said, but the level of interest in available sites confirmed that there was a strong demand for them. With only two significant office schemes under way in the city, office agents will the first to admit that the development sector has been slow to react to the increased job creation and occupier demand.
