The Government is buying the Department of Transport offices in D2 – for nearly 70 per cent less than the block made when it last sold, writes JACK FAGAN
THE Government has availed of the sharp fall in commercial property values to purchase the offices of the Department of Transport at 22/25 Clare Street, Dublin 2, for a knockdown price of € 5.65 million.
The same 1,858sq m (20,000sq ft) block overlooking the grounds of Trinity College changed hands at the peak of the property market in May 2006, when a Mayo-based private investor sold it to Royal Liver Assurance Company for € 18 million. That deal showed a yield of 3.4 per cent, according to selling agents Finnegan Menton.
The rapid decline in the value of the four-storey over basement block since then stems not only from the 60 per cent fall in capital values and the oversupply of dated office space in the city but also from the fact that under an upwards or downwards rent review, the Department of Transport was set to pay substantially less rent for the final five years of the lease.
The passing rent of €670,000 – equating to €280 per sq m (€26 per sq ft) for the office space and 13 car-parking spaces could possibly have fallen to around €400,000 under the rent review which was overdue since last July.
Sources in the Office of Public Works said the mock Georgian building was of “strategic importance” to the long-term interests of the public service.
Its location within a few hundred yards of the Dáil makes it an ideal work venue for public servants who need to be within easy reach of the Oireachtas.
The Clare Street building was one of 16 commercial properties offered for sale by Royal Liver late last year for around €120 million.
Green Property and its US investment partner TPG Capital pulled out of negotiations to buy the portfolio following the announcement of the bailout by the IMF and the ECB.
The Clare Street building is the first significant commercial property sale in the city this year and comes at a time when there are relatively few investment properties on offer because of the continuing slide in values and the rapidly diminishing bank funding available.
Investors waiting in the wings for prime investments are expecting a range of properties to hit the market in the coming months as banks and receivers move to offload distressed assets.
Dublin’s main investment agencies report that there is also a continuing high level of inquiries from overseas funds and individuals for properties under water and in the control of Nama.
Some of the same investment groups have assembled a list of UK properties under the control of Nama in the expectation that they will be the first to be offered for sale. However, there is also a limited amount of fresh debt available in the UK for even prime properties.
