Eircom to offload leases across city prior to HQ move

The telecoms firm may find it difficult to offload leases for some of its existing office space prior to its move to a new headquarters near Heuston Station, writes Jack Fagan

Eircom is planning to offload five leased office blocks in Dublin before it moves its staff to a new headquarters nearing completion opposite Heuston Station in Dublin 8.

Agent Lambert Smith Hampton will today start marketing the buildings which have a combined floor area of 20,473sq m (220,392sq ft).

Three are located in the city centre and two more are in East Point Business Park in the Dublin docklands.

The move comes after the High Court has fixed November 27th for the hearing of an action by Eircom against its landlord, the Royal College of Surgeons, over the college's decision to withhold consent for the sale of the telecoms firm's leasehold interest in its St Stephen's Green headquarters.

In February 2006, Eircom accepted an unusually high premium of over €6 million for the lease from developers Jerry O'Reilly and David Courtney. After a lengthy stalemate, Eircom is now seeking to resolve the impasse in the courts.

The developer-as-tenant is a relatively new phenomenon in the Dublin office market.

Meanwhile, Eircom is moving ahead with the disposal of its leasehold interests in Cumberland House at Fenian Street, Dublin 2; Findlater House at Upper O'Connell Street, Dublin 1; 63/66 Amiens Street, Dublin 1; and Blocks B1 and B2 at East Point Business Park, Dublin 3.

Although all of them are well located, they may prove difficult to shift because of strong competition from new developments and the possibility that the replacement tenants may be liable for the cost of dilapidations in the various blocks.

However, Ian Campbell of Lambert Smith Hampton says he is confident that there will be considerable interest in the various buildings because of their location and competitive rental levels.

The five blocks are only part of a larger property portfolio held by Eircom. It also leases a further 13,000sq m (140,000sq ft) in several city centre buildings, some of which will no longer be required once the new headquarters is available next March.

In the case of Cumberland House, owner Christopher Bennett is expected to eventually redevelop the 30-year-old block which stands on a site of 1.64 acres and has a floor area of 8,900sq m (95,800sq ft). There are also 175 car-parking spaces on site. The current rent of €3.5 million is due to be reviewed shortly under the 35-year lease which has another six years to run.

Shelbourne Developments is already refurbishing part of Findlater House which they bought in recent years and will undoubtedly do the same with the six upper floors should they decided to buy-in the Eircom lease. The telecoms company is paying a rent of €1.3 million for 4,300sq m (46,285sq ft) of office space and 75 car-parking spaces. The lease is due to run out in 2011.

Eircom is also attempting to assign the lease of a four-storey over basement terraced office building at 63/66 Amien Street which has a floor area of 1,575sq m (16,953sq ft) and 16 car-parking spaces. The rent of €460,000 per annum equates to €276 per sq m (€25.70 per sq ft). The lease does not run out until 2018.

On the same side of the city, Eircom wants to assign the lease of Blocks B1 and B2 at East Point, two three-storey interconnecting buildings with a combined floor area of 5,700sq m (61,354sq ft). There are 80 car-parking spaces. The passing rent of €1.4 million works out at around €236 per sq m (€22 per sq ft). A break option in the lease occurs in 2013.