Public sector takes the private sector route

Development Strategies:A redevelopment site of almost three acres just off Dublin's O'Connell Bridge could be opened up once the OPW decides to proceed with a joint venture. Jack Faganreports

The State's decision to redevelop Hawkins House - on a joint venture basis with a private development company - could possibly open the way for Garret Kelleher's Shelbourne Developments to assemble the largest and most valuable office site in Dublin city centre.

Kelleher has owned the equally ugly Apollo House office block on Tara Street for about four years and acquired the adjoining petrol filling station from property developer John Byrne about 12 months ago.

An agreement with the OPW on the redevelopment of Hawkins House will give him about 1.75 acres of an island site of almost three acres bounded by Townsend Street, Tara Street, Poolbeg Street and Hawkins Street.

The other major building on the site, College House, is also a first generation office block and almost as rundown as both Hawkins House and Apollo House.

It is held as an investment by the Brennan family of bread-making fame and has been largely unoccupied since the Post Office moved most of its staff out in recent years.

The lease of the building has been on the market for almost 10 years but there have been no takers, possibly because of the cost of refurbishing it.

The block also has the advantage of a large surface car-park, a facility that is seldom found in a modern city centre office building.

Another corner of the site is controlled by the Ward Anderson cinema group who operate the Screen Cinema.

The remaining portion of the site, fronting on to Townsend Street, has two bars, a dry cleaners and a block of apartments.

Dublin City Council, which is apparently planning to carry out a local area plan for the area around Hawkins House, will undoubtedly be anxious that College House and the cinema should be included in any major redevelopment scheme.

Kelleher, who is about to build a 150-storey, 2,000ft high apartment block in Chicago - making it the tallest in the United States and Europe - will undoubtedly seek planning permission for a tower block on the site of Hawkins House and Apollo House.

The site has the distinct advantage of being within two or three minutes walk of O'Connell Bridge and several major transport hubs. Office space there could be expected to rent at the highest levels.

Close by, the planners have approved a 14-storey office scheme for the site over Tara Street Station.

However, changes to the plan will be sought because of the likelihood that train services could be interrupted during the lengthy construction period.

One of the central issues in the discussions between the OPW and Shelbourne Developments will have revolved around the likely valuation placed on Hawkins House.

A figure of between €35 million and €40 million is likely to have been agreed given that the OPW had been anxious to proceed with an adjoining property owner who could unlock the development value of the combined sites.

Such a valuation would mean that when the site is eventually redeveloped, the State should stand to make in the region of €65 million from a newly completed office scheme.