Landmark IFSC office investment seeks €54m

The combination of the sheer weight of capital raised for real estate investment and the relative dearth of prime opportunities to have emerged since the easing of Covid-19 restrictions is expected to see strong interest in the sale of No 1 Harbourmaster Place.

One of the first office blocks to have been developed in the IFSC, the property has been brought to the market by agent CBRE at a guide price of €54 million,

The entire is let to KPMG under a 35-year lease from February 1991, which expires in 2026. The tenant is currently paying an annual rent of € 3,054,863 which breaks back to €46 per sq ft and €3,750 per car space.

Rent reviews are upwards-only at five-year intervals, leaving one final review to be completed in 2021. The lease is on standard institutionally-acceptable full repairing and insuring (FRI) terms.

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The guide price of €54 million reflects a net initial yield of 5.15 per cent, and a capital value of €870 per sq ft.

KPMG is a multinational professional services network, and one of the “big four” accounting organisations. Headquartered in the Netherlands, it presides over a network of firms in 147 countries with over 219,000 employees and three main service lines of financial audit, tax and advisory.

KPMG operates on an all-Ireland basis, with a broad range of domestic and international clients served by 101 partners and 3,210 people in five offices in Dublin, Belfast, Cork and Galway.

In Dublin, KPMG operates from two locations, Stokes Place where it occupies 138,000 sq ft and No 1 & 2 Harbourmaster Place in the IFSC where it occupies a combined 78,600sq ft.

KPMG’s offices at No 1 Harbourmaster Place comprise a seven-storey grade A office over-basement car park. The building extends to a total area of 5,768.4sq m (62,090sq ft) and has 53 dedicated car parking spaces.

While the property was built to a very high standard and has been very well maintained by the tenant, there is “significant scope”, according to the selling agent, to extend the floor area through additional floors and extending the floor plates. Subject to planning permission, CBRE estimate that an additional 37,500sq ft of net floor area could be added to the building.

Financial district

Located at the heart of the IFSC, No 1 Harbourmaster Place provides current tenant KPMG with a landmark and well-connected presence within Dublin's main financial district and the wider city centre. Adjoining occupiers include Citibank, AIG, Intesa Sanpaolo, Wells Fargo, Susquehanna and Rabobank.

The property is being sold by an Irish Life-managed client fund. Martin O'Reilly, head of property at Irish Life Investment Managers, said: "Our property investment funds continue to be committed to the Dublin office sector. Significant capital is being redeployed to larger new-build office schemes such as Cadenza on Earlsfort Terrace, 70 St Stephen's Green and other pipeline projects."

Commenting on the outlook for the office sector more generally, he added: “There has been much debate around the future of the office sector but the consensus view emerging from both investors and occupiers is that the office forms an integral part of a company’s infrastructure.

“Working from home was already a reality for many companies, and others have had no choice but to follow suit during the current pandemic. This has served to highlight some of the shortcomings of remote working as it can curtail the potential for collaboration and long-term building of a corporate culture. When normality resumes a balance will emerge for a blend of office-based and remote working.

“Occupier demand for prime offices in convenient locations with excellent transport links will bounce back, and as a result investor demand will be focused on such opportunities.”

Investments

Colm Luddy, who is handling the sale on behalf of CBRE, says: “While the market has to an extent been on pause, with limited new opportunities being brought to the market, we anticipate that a number of investments will transact in the final quarter of 2020.

“There is a significant amount of capital raised for real estate investment which will look to be deployed before the year-end. No 1 Harbourmaster Place will no doubt attract both international and domestic investors due to the quality of the building, tenant and location.”