Colony focuses on tech ‘mega leases’ as Dublin investment tops €3bn

LA real estate group Colony Capital predicts Dublin will run out of office space by 2021

The AIB Bank centre complex in Ballsbridge where Colony Capital and Ronan Group Real Estate are developing land that will be let to Facebook. Photographer: Dara Mac Dónaill

The AIB Bank centre complex in Ballsbridge where Colony Capital and Ronan Group Real Estate are developing land that will be let to Facebook. Photographer: Dara Mac Dónaill

 

Los Angeles real-estate investment group Colony Capital has said it was committed long-term to the Dublin market, where it was focusing on “mega leases” to technology giants, after running up property portfolio worth more than €3 billion in the capital over the past five years.

In an interview with online publication Bisnow, Colony’s managing director of investment management, Stefan Jaeger, said it saw “very good buying opportunities” when it entered the Dublin market and began to work with local developers Paddy McKillen and Johnny Ronan.

Colony’s sees itself as a long-term investor in the market, according to Mr Jaeger. Its latest deal saw the company and Mr Ronan’s Ronan Group Real Estate (RGRE) complete the purchase last month of a 4.6-acre site – known as Project Waterfront – from Nama in the heart of Dublin’s docklands for more than €180 million.

Earlier this month, Facebook confirmed that it had agreed to lease the AIB Bankcentre campus in Ballsbridge in Dublin 4, a large part of which is being developed by Colony and RGRE.

Colony, which partly backed Mr Ronan’s refinancing of borrowings from Nama in 2015, became an equity partner in the multimillion-euro Ballsbridge project during the summer when it bought out a stake held by Siobhan Quinlan, the wife of property financier Derek Quinlan.

Amazon

Colony also backed Mr Ronan on an office scheme at Burlington Plaza in Dublin, where tenants include ecommerce giant Amazon, and it is focused on “mega leases” to technology groups, according to Mr Jaeger.

“You can see the results of that in the Amazon lease, the Facebook lease and the occupier inquiries in our Spencer Place development,” Mr Jaeger told Bisnow, referring to a new office scheme being developed in the Dublin docklands. “In light of that, we have decided to focus specifically on that sector and specifically on catering to these mega leases.”

“There are very few people in this niche, which is always a good place to be as it means occupiers have limited choice other than looking at our developments,” he told the publication.

‘Running short’

US cloud computing giant Salesforce is reported to be in talks to lease the 500,000 sq ft (46,184 sq m) Spencer Place building, which could accommodate as many as 5,000 workers.

While some commentators estimate that prime Dublin office supply is finally beginning to catch up with demand, after construction picked up in the wake of the property crash, Mr Jaeger said: “By our estimation, Dublin is going to be running short of office space again by 2021.”