After several extraordinary years in which the value of investment in the commercial property market ranged from a record €7.2 billion in 2019 to the relative nadir of €3 billion at the height of the Covid-19 pandemic in 2020, to €5.5 billion and €6 billion in 2021 and 2022 respectively, the peak has given way, in no uncertain terms, to the trough with investment turnover expected to struggle to hit €1.8 billion for 2023. To put that figure in perspective, it’s the lowest level of investment since 2013.
While it remains to be seen just how far we really are through the present downward cycle, no amount of talking things up will help investors or their lenders in overcoming the obstacles still presented by what many consider to be “elevated” interest rates and inflation, which has not yet been brought to heel. Add to that the ongoing difficulties presented by the war in Ukraine, the war between Israel and Hamas in Gaza, and the uncertainty that is bound to be created by the upcoming US presidential election, and it’s plain to see that 2024 will present its own threats to a recovery in the commercial real-estate market.
That’s not to say that opportunities won’t exist in the year ahead. There are bright spots to be found even amid the gloom, and these are in the areas of industrial and logistics, hotels, and dare we say it, in the retail sector. Those looking for evidence of the above have a useful starting point in the top 10 deals for 2023, the details of which are outlined below.
1. Baldonnell Business Park, Phase II: Completed just 12 days ago, the most valuable deal this year saw the family firm of Zara founder Amancio Ortega paying about €225 million for a major logistics investment at Dublin’s Baldonnell Business Park. The sale by industrial and logistics property development specialist Mountpark of the scheme’s second phase to Pontegadea also bears the distinction of being the largest and most valuable logistics deal ever to have taken place in the Irish market. Mr Ortega’s firm now owns and controls1.2 million square feet of fully-occupied logistics space at the Baldonnell scheme with some 630,000sq ft of this taken up by online retail giant Amazon’s newly-developed e-fulfilment centre.
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2. Building One and Two, Greenogue Logistics Park: The first quarter of this year saw Ingka Investments, the investment arm of Ikea’s largest franchisee, the Ingka Group, paying about €110 million to KKR and real-estate private-equity specialists Palm Capital for two of the three warehouses at Greenogue Logistics Park in Rathcoole, Co Dublin. The deal comprised Building One and Two, the latter of which is occupied by Ikea and its distribution contractor Wincanton.
3. Opus, 6 Hanover Quay, Dublin 2: Pontagadea made its first foray into the Irish commercial real-estate market at the end of March with a €101 million deal for 120 apartments at Opus, the high-end apartment scheme at 6 Hanover Quay in Dublin’s south docklands. The price paid by the Spanish investor equated to an average of €841,666 per unit and matched the figure the scheme’s outgoing owners, New-York headquartered investor TPG Angelo Gordon and its local partners, Carysfort Capital, had paid to secure ownership of the scheme from its developer, Cairn Homes, in 2019.
4. Eglinton Place, Donnybrook, Dublin 4: UK-headquartered investor M&G paid €99.5 million in February for a portfolio of 148 apartments at Eglinton Place in Donnybrook, Dublin 4. The luxurious build-to-rent (BTR) scheme which is in the process of being completed by Irish developer Richmond Homes, will target demand at the upper end of Dublin’s private rented sector. The development’s one-, two- and three-bedroom apartments will be complemented by the provision of communal lounges, rooftop gardens, a gym, 208-bicycle spaces and 1,400sq m of external amenity space.
5. George’s Quay House, Townsend Street, Dublin 2: Having first entered the Irish market in 2016, French investor Corum grew its portfolio here to 21 properties with an overall value of €575 million in July when it acquired George’s Quay House and the F1 Building in Cherrywood for sums of €81 million and €30 million respectively. Corum purchased George’s Quay House from UK property company Henderson Park. The building, which forms part of the wider George’s Quay development extends to 105,000sq ft and includes Fidelity and CIB in its tenant line-up.
6. The Hexagon Portfolio: While most people were getting ready for, or already on their holidays in July, Davy Real Estate completed the €74 million acquisition of the Hexagon portfolio, a collection of six regional shopping centres built and owned by developer Pat Doherty’s Harcourt Developments. Davy stepped in to buy the centres in Dublin, Donegal, Galway, Laois, Limerick and Louth after two earlier prospective purchasers – Cork-based Lugus Capital and Canadian-headquartered Camgill Development Corporation – walked away from their respective negotiations to buy the portfolio. The Hexagon portfolio comprises Donaghmede Shopping Centre in Dublin; Letterkenny Shopping Centre in Donegal; Galway Shopping Centre; the Laois Shopping Centre in Portlaoise; Parkway Shopping Centre in Limerick, and the Longwalk centre in Dundalk, Co Louth. The price paid by Davy represented a 26 per cent discount on the €100 million which had been guided by agent JLL when it first offered the shopping centres for sale on the instructions of joint receivers Shane MacCarthy and Cormac O’Connor of KPMG.
7. Waterside, Citywest Business Campus, Dublin: In February, Irish real-estate operator and investor Fine Grain Property completed its biggest and most valuable investment to date in the Irish market, paying €65.5 million to Iput for Waterside at Dublin’s Citywest Business Campus. The investment comprises a 15-acre campus with 219,281sq ft of office accommodation distributed across five buildings. Current occupiers at Waterside include Fidelity Investments, SAP, Glanbia and Hidden Hearing.
8. Blackwater Retail Park and City East Retail Park: US investment giant Realty Income Corporation entered the Irish market in July, paying Eden Capital €45.9 million for CityEast Retail Park in Limerick and Blackwater Retail Park in Navan, Co Meath. Eden Capital had acquired the retail parks for its part in 2020 and 2021. The tenant line-up at CityEast includes B&Q and Harvey Norman, while Blackwater counts Woodie’s and Currys among its occupiers.
9. Units at Rosemount Business Park and Airport Business Park, Dublin: Having secured €110 million from the sale of two blocks at Greenogue Logistics Park earlier this year, KKR and Palm Capital returned to the acquisitions trail with a €41 million deal for 357,000sq ft (33.166sq m) of industrial and logistics space split between unit D1 at Airport Business Park and units 1a and 1b at Rosemount Business Park in Dublin. The amount paid to Iput equates to a price of €115 per square foot. While the Rosemount units, which extend to 25,083sq m (270,000sq ft), were developed originally for Irish Express Cargo in the late 1990s, they are home today to Dunnes Stores’ main distribution facility. The Irish-owned retailer occupies the property on a 20-year lease dating from September 2008.
10. 87-88 Harcourt Street, Dublin 2: When it came to the market first in February 2022, the Dublin office of leading law firm Byrne Wallace was guiding at a price of €45 million. Just two months later, and with a lease extension and rent increase in place, the figure being sought on behalf of joint receivers Luke Charleton and Andrew Dolliver of EY-Parthenon jumped to a more ambitious €52 million. And while German-headquartered investor AM Alpha came along with a lesser offer of €43 million, it walked away before a deal was done, leaving the receivers with little choice other than to rein in their expectations once again. Consequently, the guide price was slashed to €37 million in February of this year in an effort to lure a buyer in. In the event, a French investor came along in the second quarter and secured ownership of the property for €34 million. The price paid represented a discount of 35 per cent on the €52 million which had been guided at the height of the protracted sale process.
