While much of the investment in the Dublin office market has been directed over recent years towards new buildings in the docklands, core assets in the city’s traditional central business district continue to attract buyers seeking income with a strong tenant covenant or redevelopment potential.
The sales of St Stephen’s Green House and the adjoining No 4 Earlsfort Terrace offer the prospective purchaser the rare opportunity to pursue both options in an area widely regarded as Dublin’s most sought-after office address.
In the case of St Stephen's Green House, joint agents Knight Frank and Savills are guiding a price of €50 million for the property on behalf of State Street Global Advisors' New Ireland Assurance Fund and Irish Life Investment Managers (ILIM). No 4 Earlsfort Terrace, for its part, is being offered to the market by sole agent Knight Frank at a guide price of €13 million. While the sales processes are being conducted independently of each other, the properties' location next to each other presents an opportunity for an investor to acquire both buildings with a view to pursuing the redevelopment of their combined footprint.
Built in the mid 1960s as the headquarters for the Irish Sugar Company, St Stephen’s Green House, at eight storeys, is the tallest block fronting on to St Stephen’s Green. Located near the corner of Lower Leeson Street on Earlsfort Terrace, the property currently comprises 6,348sq m (68,325sq ft) of office space with a generous car parking allocation of 106 spaces laid out over two basement levels.
The building is let to five tenants, including the OPW, Hayes Solicitors, Aramark and Lisney, producing a current rent of more than €3.12 million. The average unexpired lease term is approximately 4.25 years to break options (4.75 years to lease expiry). Part of the fifth floor, extending to 529sq m (5,681sq ft), is vacant, however terms have been agreed to lease this space. The guide price of €50 million reflects a net initial yield of 5.7 per cent, increasing to 6.20 per cent following letting of the vacant space.
There is significant potential, according to the selling agents, to increase the building’s average rent of €42.50 per sq ft by remodelling the existing property or redeveloping the site. To this end, Henry J Lyons architects have prepared a feasibility study to show a range of development options. These studies suggest there is potential to add from 1,400sq m - 5,600sq m (15,000sq ft - 60,000sq ft) to the building’s existing floor area.
Commenting on the sale, Knight Frank and Savills say: “St Stephen’s Green is undoubtedly Dublin’s finest office address and St Stephen’s Green House is one of the best-located buildings overlooking this prestigious square. With office rents forecast to grow strongly over 2022, the investment provides a very attractive value-add opportunity.
“The sale provides a rare opportunity to acquire a building in this prime location with short- to medium-term secure income stream and excellent potential to either remodel the existing block or pursue a full redevelopment.”
No 4 Earlsfort Terrace, meanwhile, adjoins St Stephen’s Green House and comprises 1,159sq m (12,477sq ft) of high-quality, grade A office accommodation distributed over five floors. The property, which fronts on to Earlsfort Terrace, includes 15 secure car-parking spaces located in the basement of St Stephen’s Green House.
The subject property recently underwent a comprehensive refurbishment. The works included a full upgrade of its office finishes, the installation of new air conditioning and electrics and the remodelling of its reception area. New showers have also been provided for the tenants at each level.
No 4 Earlsfort Terrace comes to the market fully let to three leading professional and financial firms including Royal London Insurance, Maples Solicitors and AllianceBernstein. The investment, which is for sale at a quoting price of €13 million, is generating total current income of €772,477 per annum with a weighted average unexpired lease term of 6.3 years to expiry (three years to break option). The quoting level promises the purchaser a net initial yield of 5.50 per cent.