Bank HQ and three acres for over €105m
STATE STREET’S Irish banking headquarters and an adjoining development site of over three acres in the south Dublin docklands are to be offered for sale on the international market at an overall price of more than €105 million.
The sale has been triggered by Paul McCann and Patrick Dillon of Grant Thornton, receivers to Liam Carroll’s collapsed Danninger Group which developed the complex. Funding for the project was provided by Ulster Bank, part of the Royal Bank of Scotland. The eight-storey block at Sir John Rogerson’s Quay includes 16,226sq m (174,653sq ft) of high quality office space and 140 car-parking spaces in a double basement.
Although agent Savills may end up selling the office block and site separately, they are not providing a guide price for either lot. However, a valuation of around €90 million for the office building would show an income yield of about 8.3 per cent – an attractive proposition for some of the major investors who are banking on a recovery in the Dublin office market over the next three to four years.
State Street is paying a rent of €7,818,715 per annum under a 25-year lease from August, 2009, with a guarantee from State Street Corporation. The lease provides for a break option at the end of the tenth year but includes a nine months rental penalty if it is exercised. The lease also allows for rental increases in years six, eight, nine and 10 in line with the Consumer Price Index. The current rent of €452 per sq m (€42 per sq ft) is considerably stronger than the going rate in the docklands of €269 to €323 per sq m (€25-€30 per sq ft).
Apart altogether from the international prestige and security of having State Street bank as a tenant, investors will undoubtedly be impressed by the design, specification and fit-out of the building which is generally acknowledged as probably the best in the docklands.
State Street had insisted that it would only take a lease if the building was finished to the best international standards. Carroll, who had a reputation for skimping on fit-outs, had no option but to comply.
Domhnaill O’Sullivan of Savills said that given the central location of the block and investor appetite for well-let third generation offices he was confident the investment would attract considerable Irish and overseas attention in the coming weeks.
There is also likely to be developer interest in the 1.24 hectares (3.06 acres) site next to State Street Bank which will probably have a value of around €15 million. It is one of the last substantial sites available in the south docklands.
Whilst a new owner is likely to seek revised planning for the site, they will be surprised to find that not only has the former Hammond Lane Foundry land undergone full remediation but a substantial excavation has been carried out to accommodate a double basement.
A feasibility study suggests that the site could accommodate 33,300sq m (358,438sq ft) of offices, 1,040sq m (11,194sq ft) of commercial space and 80 apartments.
Developers will be well aware that with a shortage of new office accommodation in Dublin 2, the future requirements of firms like KPMG and Bank of New York Mellon may well be satisfied at Sir John Rogerson’s Quay.