A Dublin property company has paid the equivalent of £5 million for "air space" over Connolly railway station in Dublin. It plans to build a 38,000-square-foot office block, which will form part of the International Financial Services (IFSC). Meanwhile, Citibank is due to announce shortly whether it will proceed with a new Irish headquarters in the IFSC. The bank wants to build 100,000 square feet initially and possibly a similar sized building at a later stage. About a dozen of Dublin's leading office developers, including Hardwicke, Brian Rhatigan, and Dermot Pierce/Christopher Bennett, were in contention for the site at Connolly Station but it went to a consortium led by John Flynn and Paddy Kelly. The office block is expected to cost between £5 million and £6 million and the developers will first have to spend £3.5 million on upgrading the railway concourse.
CIE has devised a novel way of drawing a stream of income from the office block on a long-term basis rather than selling off the site.
This approach is in direct contrast with An Post, which sold a better site in the IFSC, the former Sheriff Street postal sorting office, without any recourse to rental sharing. In addition to an initial payment of £500,000 to CIE and the Dublin Docklands Development Authority (DDDA), the company developing Connolly Station will have to share a proportion of the rental income which equates to a capital value of £5 million.
Moreover, CIE has also insisted that rent reviews over a 200-year term should be on a upwards-only basis. Should rents remain stagnant or fall back after the IFSC tax breaks run out, the developer will still have to cover any shortfall to CIE and the DDDA. G. & T. Crampton will begin work next month on the refurbishment of the station and the development of the office block.
The upgrading of the station will greatly enhance passenger facilities to complement the newly launched Dublin/Belfast service. When the development is completed, an old vault once used to stable horses and carriages will be converted into a pedestrian entrance to the station and the IFSC.
Sherry FitzGerald will be quoting rents of £27.50 for the new office block, which will have about 50 car-parking spaces. The scheme will provide a valuable tax shelter for Mr Flynn and Mr Kelly, who are heavily involved in several other property developments in the city.
Meanwhile, if Citibank eventually decides to locate in the IFSC, it will have to pay in the region of £20 million for a two-acre site close to Jury's Inn.
The DDDA is known to be keen to attract Citibank because of its huge employment potential. Citibank is already substantial employers in the city and when it opens its new headquarters, it plans to hire up to 1,000 people in a "back office" operation to support the bank's global operations. The bank has leased temporary accommodation in the former FAS office in Upper Baggot Street and the former Bord na Mona HQ in the same area.
