East Point office block for over €17.3m

OfficeInvestments:A modern block at East Point Business Park has good potential for rental growth, writes Jack Fagan

Irish Life is planning to offload an office investment at East Point Business Park in the Dublin docklands.

Savills HOK's investment division is seeking over €17.3 million for Block P2, a distinctive seven-year-old glazed block rented by NTL Communications (Ireland) Ltd.

The company is paying a rent of €1,016,132 per annum but a review is outstanding from the end of 2005 and another is due in 2010.

The current rent will show an initial yield of 5.27 per cent but the agent estimates that this should increase to around 5.8 per cent on review.

Michael Clarke of Savills HOK says that, after a period of sustained rental growth in the office market, new buildings in the nearby docklands area were achieving headline rents of up to €600 per sq m (€55.75 per sq ft). The passing rent of the NTL building equated to only €218.76 per sq m (€20.32 per sq ft) and, with East Point so close to prime city centre locations (as well as the quality of the building and good transport links), there were excellent prospects for rental growth, he said.

NTL has break options in the lease coming up in December 2010 and 2015, but these were subject to between 12 and 18 months notice and the payment by the tenant of an 18 months rental period. "This should effectively allow the landlord a minimum of 30 months cover to relet the building in the event that any of the breaks are exercised," says Clarke.

The NTL block is a four-storey, third generation building extending to 4,532sq m (48,782sq ft). There are 71 on-site car-parking spaces.

Designed by Scott Tallon Walker, the block has an impressive full height glazed atrium with a feature staircase leading to the upper floors.

In 2006 property developer Sean Reilly paid €24.75 million for another block in East Point occupied by Cisco Systems. That deal is producing a return of 4.85 per cent.

East Point has attracted a large number of high profile tenants including Sun Microsystems, Oracle, AOL, Yahoo, Whirlpool and Enterprise Ireland. Two further blocks under construction in the park are available at rents of €270 per sq m (€25 per sq ft).