Over €500m for Pavilions centre in Swords

The sale of the Pavilions centre in Swords is the most significant investment to come on the market for many years, writes Jack Fagan

One of the key shopping centres in the Dublin suburbs, the Pavilions in Swords, along with an adjoining development site of 5.2 acres, are to be sold by tender on June 23rd through agent Druker Fanning & Partners.

The complex is being enlarged to include an additional 20 shops and restaurants, and an 11-screen multiplex cinema.

The huge retail investment is the largest and most significant to come on the open market in this country and will be of interest to a range of developers, business syndicates and investment advisers. It is expected to realise over €500 million.

The sale, by the Eircom Superannuation Fund, has been triggered by a need to rebalance its portfolio.

The timing of the sale could hardly have been better because of a pent up demand for prime retail investments which have been particularly scarce in the Dublin area in recent years. Retail buildings in Dublin city centre have been making record prices with investors having to settle for yields of 2-2.5 per cent on secondary streets and as low as 1 per cent in a recent sale on Grafton Street.

The first phase of the Pavilions with 65 shops and restaurants is currently producing rents of €8 million, with the first rent reviews now due to get under way. Quoting rents for the second phase of the centre - covering the multiplex cinema, 20 further shops and restaurants along with civic facilities (due to open for business next October) - will equate to €5 million per annum.

With the rent roll expected to top €17 million by this autumn, a 4 per cent yield on the investment works out at a price of €425 million while a 3 per cent return equates to a figure of €560 million. And that is before taking into account the obvious potential, subject to planning permission, to provide at least another 92,903sq m (1 million sq ft) of shopping, offices and residential buildings on the adjoining 5.2 acres which is in a pivotal location on the Malahide Road/Swords dual carriageway.

The entire site area of the Pavilions extends to 24 acres and, if new owners decide to reconfigure the extensive surface car-park with more multi-storey or basement car-parking and develop further, the overall development value could easily hit the €1 billion mark.

At present there are 600 surface car-parking spaces and a further 1,100 in a multi-storey building. The spaces are well used for much of the week because of the undoubted success of the shopping centre which is anchored by Dunnes Stores, Superquinn, TK Maxx and Argos. Pedestrian flows and customer footfall have increased steadily since the opening of the centre.

The high level of trading in the Pavilions obviously opens the way for further shopping facilities on site. The centre caters for an ever-increasing number of shoppers on the east coast, from Santry to Drogheda, as well as from Ashbourne, Malahide, Portmarnock, Lusk and Balbriggan.

The Fingal area is the fastest expanding region in the greater Dublin area and the current population of 195,000 is expected to exceed 250,000 by 2010. About 4,000 acres are zoned for residential developments in the Fingal area and the planners estimate that about 45,000 new homes will be required to accommodate a growth in the population up to 2010.

It is not often that an opportunity like this becomes available, not only providing immediate cash flow from the rents, but also providing a unique development opportunity to increase investment value.