Shot in the arm for Galway market

JACK FAGAN Commercial Property Editor The Galway commercial property investment market has been given a further shot in the arm with the sale of the TK Maxx mixed-use building overlooking Eyre Square for a considerably higher price than expected.

A Galway-based investor has paid just over €14 million for the investment – well ahead of the €11.5-plus originally quoted by Aidan Gavin of selling agents DTZ Sherry FitzGerald. Mr Gavin was available for comment yesterday.

The sale attracted considerable local and national interest because of the high profile location, the strength of the main covenant and the likelihood of finding tenants for two remaining office units and two further shops which have been vacant since the building was completed five years ago.

The successful fashion discounter TK Maxx is anchoring the five-storey over basement Citypoint block which though only partially occupied is producing a rental income of just under €1 million. A local company, GK Developments, which built the block, is selling the investment on the instructions of Nama.

TK Maxx is paying a rent of €800,000 for 3,994sq m (42,990sq ft) on part of the basement as well as the ground and first floors. The 20-year-lease from 2009 is subject to upward only rent reviews and includes a break in the 10th year.

Two other retail units at ground and basement levels with a total of 570 sq m (6,125sq ft) are currently vacant and when let are likely to be bring in an additional €214,737, based on a rent of at least €376 per sq metre (€35 per sq ft).

One of the office suites is let but two more on the second and third floor extending to 2,014 sq m (21, 678sq ft) are still vacant.

When they are eventually occupied they are likely to rent at €129 per sq m (€12 per sq ft) , boosting the rental income by a further €260,136.

Seventeen fully fitted apartments on the fourth and fifth floors are let to Western Hotel on a 10-year lease from 2013, at €149,400 per annum, subject to a break option in 2016. The rents work out at €8,764 per annum for each of the apartments-well below the going rate for well located residential units in the city.

Citypoint has three basement floors including 84 car parking spaces.

Forty of them are rented at €37,491, leaving 45 further spaces for letting. The office and residential elements of the development have separate entrances.