Galway city centre office block on market for €14m-plus

A newly refurbished office building largely occupied by insurance company MetLife in Galway city centre is expected to attract bidding from private and institutional investors when it goes for sale this week.

Agent CBRE is seeking in excess of €14 million for the Hynes Building, which overlooks St Augustine Street and is within a few hundred yards of Shop Street, Galway's main shopping precinct.

The three-storey Hynes Building dates from the 1970s, and links up at the rear with another office block, St Clare's Walk, to bring the overall floor area up to 5,277sq m (56,800sq ft). The buildings produce an annual rent of €707,988 from tenants MetLife, Galway County Council and the industrial distributor CK Electricians.

MetLife moved into the newly upgraded building last October, renting an overall floor area of 4,366sq m (47,000sq ft) at €540,000 per annum. The 10-year lease provides for a break option in year seven. In the meantime the next owner of the office complex will have an opportunity to renegotiate the rent, which at €12.30 per sq ft is well below the going rate of €18.

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Galway County Council pays a rent of €152,000 for 2,322sq m (25,000sq ft), while CK Electricians occupies an office suite of 65sq m (700sq ft) in St Clare’s Walk at an annual rent of €12,000. The county council lease is due to run until 2029.

Sandra Walsh of selling agent CBRE said that apart from having a secure income with a weighted average lease period of 7.5 years, there was potential to increase the rental income through letting vacant space extending to more than 297sq m (3,200sq ft).

The €14 million asking price for the Galway investment will reflect a net initial yield of 4.66 per cent and a stabilised return of 5.20 per cent once a tenant is found for the vacant space.

The Hynes Building has an attractive stone facade, with large glass windows to ensure natural light for much of the day.

Walsh said the city centre building had an excellent income profile and a beautifully finished modern fit-out. “This investment opportunity is likely to appeal to a variety of investor classes,” she added.

There has been a strong uptake of office accommodation in Galway in recent years. This is largely underpinned by a multinational appetite for the city as a European destination. New arrivals in the foreign direct investment sector include IP Switch, MetLife, The Mathworks and Site Minder.