Almost 10 years after several development sites in the Sandyford area of south Dublin sold for more than €20 million an acre, one of them is about to come back on the market at a fraction of its original value.
Agents Knight Frank are to invite offers of more than €9 million for a standalone site at the entrance to Sandyford Industrial Estate, which was sold towards the end of 2006 for €110 million.
The resale by John Lally's Lalco development company has been triggered by Nama amid signs of renewed building activity in the adjoining Central Park. Green Reit is about to provide additional offices and Kennedy Wilson is completing the construction of an apartment block started by Treasuring Holdings before it collapsed.
The Lalco site at 1.727 hectares (4.265 acres) is slightly smaller than the one it bought during the boom. Over half an acre of the original five acres has since been sold to the Railway Procurement Agency to accommodate a section of the Green Luas line which runs along the boundary of the site.
Assuming that the land will make the expected €9 million, on top of the €16.5 million secured for the railway line, Lalco will still be faced with a 77 per cent fall in valuation even before interest rates and transaction fees are taken into account.
Bad and all as this is, Lalco can count itself luckier than Ray Grehan’s development company, which had to cope with an 87 per cent collapse in value when it was forced to sell the €171.5 million 2.02-acre UCD veterinary college site in Ballsbridge for €22.5 million.
The beneficiaries were Galway-born Luke and Brian Comer, who are now building a vast office and apartment complex on the Dublin 4 site.
The Lalco land has a particularly high profile at the entrance to Central Park, which is widely acknowledged as Dublin’s best suburban office park. New office rents here are generally about €269 a square metre (€25 a sq ft) – about half the going rate for the best quality space in the city.
James Meagher of Knight Frank, who is handling the sale, estimates that the site will accommodate a seven- or eight-storey development of between 300,000-350,000sq ft of office space.
He said he was expecting “significant interest” in the island site given the shortage of grade A space. “While developers will be sure to target this opportunity it may also be of interest to an owner-occupier who wishes to create a campus-style headquarters.”
One developer certain to throw a rule over the site is Green Reit, which acquired Central Park with joint venture partner Kennedy Wilson for €310 million. Green originally took over the offices and Kennedy Wilson assumed ownership of the apartments. More recently, Green reached agreement with US giant Pimco to buy in the 50 per cent stake it did not own for €160 million.
With continuing demand for offices in the area, Green is currently developing another block extending to 13,935sq m (150,000sq ft), which will be ready for fit-out in July.
It will not end there as there is a further seven acres of development land in Central Park, which could accommodate an additional 500,000sq ft of offices.
In recent years, Mr Lally has been managing an extensive commercial portfolio acquired by the American billionaire John Malone.
These include the Westin, Hilton and Trinity hotels in Dublin, the Strand Hotel in Limerick, the Humewood estate in Co Wicklow, Sir Anthony O'Reilly's Castlemarket estate in Co Kildare and the 840-acre Ballylinch stud farm in Co Kilkenny.