Park West offices sold at steep discounts
Block 11b and Block 12c, Park West: sold for €506 per sq m and €430.56 per sq m respectively
Two more office buildings in Dublin’s Park West Business Park on the edge of the M50 have been sold at knockdown prices – one for 88 per cent less than it was bought for in the late 1990s and the other for 80 per cent below the original purchase price.
Block 12c, a three-storey building with 1,759sq m (18,934sq ft), has been acquired by an IT company for €735,000 – a long way from the €6,353,240 paid for it by 13 investors around 1999.
The second block, 11b, slightly larger with a floor area of 1,976sq m (21,269sq ft), has just changed hands for close to €1 million, a fraction of the €5,080,000 it made in 1998 when bought by a 14-strong investment consortium.
The two blocks were part of a number of stand-alone buildings completed mainly in the 1990s by Harcourt Development and sold to groups of investors with the help of a sweetener – the prospect of valuable tax breaks.
In some cases Pat Doherty’s development company guaranteed the rent for the first three years to give the new owners time to find suitable tenants for their buildings.
Though the office space was slow to move initially the investors did not lose faith, largely because of the prospect of availing of 100 per cent capital allowances against all income with 25 per cent available in the first year and 4 per cent per annum thereafter.
One drawback, largely overlooked by many of the investors when they bought into the speculative deals, was that the tax concessions could only be availed of if the buildings were let to IDA-approved companies involved in IT and RD. That condition proved a huge stumbling block.
Some of the buildings have lain empty in the intervening 14 years because the investors could not find suitably qualified companies in the early years. More recently the demand for out-of-town office space has taken a hit as a result of the economic slowdown.
Block 11b has never been occupied since it was bought in 1998 while part of the other building was rented “sporadically” for about five years.
The failure to find office tenants in Park West is all the more surprising because the two blocks held by the investors were better finished than office buildings in most out-of-town office parks. The high quality fit-out included raised access floors, suspended ceilings with recessed lighting, air conditioning and a handsome entrance via a triple height atrium.
Keith O’Neill of BNP Paribas Real Estate who along with Knight Frank handled the sale of the two blocks, said that from the very outset both buildings were priced to sell in order to create some degree of interest. Most of the inquiries came from firms along the M50 belt as well as some in Park West. He said the selling prices broke back at €506 per sq m (€47 per sq ft) for Block 11b and €430.56 per sq m (€40 per sq ft ) for 12c. This, he said, was exceptional value as it would take in excess of €2,150 per sq m (€200 per sq ft) to develop similar buildings at the present time.
Block 12b was bought by James Nugent of Lisney on behalf of Allianz Worldwide Care which already employs 700 workers in the park. Peter Browne of Browne Corrigan Chartered Surveyors acquired Block 12c for an IT company.