A subsidiary of Zoe Developments has been refused planning permission by Dublin Corporation to convert an award-winning apartment building near Smithfield into 47,000 sq ft of offices.

The newly completed block, ready for occupation for over a year, has 60 apartments and six duplexes/townhouses and retail space on the ground floor. Zoe says that while they are still assessing what course of action to take, it is unlikely that the building at the junction of Church Street and North King Street will ever be used as apartments.

The company contends that it can only secure an economic return on the building if it is put into commercial use because of the high cost of developing it under the terms of an architectural competition.

Converting the building into an office complex is the preferred commercial avenue according to Zoe director, David Thorpey. "Due to the high level of finish, the square footage build costs were far more significant than initially planned. The costs went way over budget," he said. At present the office market is booming, with demand for city centre space high.

The site was considered a prime development spot for an apartment or office complex due to its central location behind the Four Courts and close to Smithfield. Quite a number of legal services are based in the area. Two of the three law libraries are located on Church Street, one at the Distillery building and another at 158/159 Church Street.

Zoe's attempt to get commercial status for the building comes at a time when it and other developers are scaling down their involvement in the residential market. Zoe Developments, by far Ireland's most prolific apartment developer, is now concentrating increasingly on the commercial market following the Government's intervention in the residential market.

Zoe's David Thorpey says that if the Government wants houses, it can build them itself. He contends that the two year guillotine on residential planning permissions is driving developers out of the housing market.

The decision to reduce the time frame for completing housing schemes from five to two years is seen as the latest attack on a housebuilding industry already reeling from the effects of a Government ruling that up to 20 per cent of all sites should be set aside for social or affordable housing. With planning permissions only running for two years, residential developers say that with so many city centre sites now subject to archaeological surveys, it is not possible to complete schemes. Zoe has traditionally sold a large proportion of its city centre apartments to investors who have now been forced out of the market.

Although demand for residential units in the city centre has never been higher, there were fewer completions last year than in 1995. The shortfall has accentuated the problems facing the rental market and has led to a sharp increase in rents.

Dublin Corporation planners found that the Zoe plan would "specifically contravene the objectives of the design brief of the architectural competition held for the site". The corporation found it to be contrary to both the residential development objectives of the site, and the proper planning development of the area as the scale of the changes proposed and the loss of virtually all residential units would undermine the mixed land use objectives of the HARP Plan.

The mixed-use building was designed by Shelley McNamara of Grafton Architects when her brief for the site was chosen in a joint competition held by Dublin Corporation and Zoe Developments. Wooden window shutters are an eye-catching exterior detail of this modern sixstorey redbrick building. Close to Smithfield, Dublin Corporation's original design brief was to develop a mixed scheme.

Meanwhile, Dublin Corporation has granted permission to Zoe, trading as Royceton Ltd, for the conversion of part of the nearby Smithfield Gate apartment complex into offices located on the corner of Red Cow Lane and North King Street.