After five years when no new offices were developed in Dublin, an explosion of construction activity is now being planned by various parties. By far the biggest is by the National Asset Management Agency in the Dublin docklands, where it has an interest in 75 per cent of the 22 hectares that are available for development and have been designated by the Government as a strategic development zone (SDZ).
The beauty of the SDZ is that planning permission will take no more than three months to receive and there can be no third-party appeals once Dublin City Council has given a development the green light.
The potential development area is twice the size of the IFSC. It will comprise 350,000 square metres of new commercial space and 2,600 high-spec residential units. It will also involve two new pedestrian bridges across the Liffey to link the north and south side of the docks, and additional public transport links.
Nama is the kingmaker in an area that is of huge strategic importance to both Dublin and Ireland in terms of economic development, employment opportunities, and housing needs. The gross development cost is estimated by Nama at a hefty €1.9 billion.
On Monday, the ball was set rolling when the Nama-appointed receivers to Boland’s Mills –
of Savills – announced details of a €150 million development of the historic site on Barrow Street.
The application to Dublin City Council proposes the restoration of the five original mill buildings and the construction of three new office and residential blocks as well as public spaces.
Savills isn’t wasting any time. It has decided to tender for enabling works at the site so that if permission is secured next March, initial work on preparing for development can begin immediately. No sooner had the plans been released than the IDA was in touch to say it had a potential client in the US interested in taking 150,000 square feet of office space. The fast-track planning permission means that Boland’s Mills could be a perfect fit this ICT client.
It is is already a busy hub for social media and legal services – Google and Mason Hayes & Curran are a couple of the high-profile tenants on the street – and a number of companies in the area are believed to have expressed an interest in the development.
In many ways, Boland’s Mills will be the low-hanging fruit of the planned docklands development, which could take between 10 and 15 years to complete, according to some property sources.
It is in a prime location that is well established with the ICT and multi-national sectors. The north docks, where the majority of sites lie, could be a harder sell while the business case for all this development still has to be proven. After all, Ireland’s economic recovery is still in its early stages.
While it will be some time before cranes begin to dot the docklands landscape, Nama has already provided funding to key infrastructure projects. This includes a €10 million loan to Dublin City Council for a new pedestrian bridge across the Liffey, close to the Conference Centre Dublin, and a €26 million facility to Irish Water for sewerage and waste water works to ensure there is sufficient capacity available north of the river when the new blocks are finished out.
How will the overall development be funded? While Nama has financial firepower to meet the costs itself, the agency is risk-averse given that its mandate is to break even or, preferably, to deliver a surplus to taxpayers.
"If required, we could do it all ourselves and fund it ourselves," Nama chief executive Brendan McDonagh tells The Irish Times. "I don't think we will end up doing it all ourselves, I think there will be other [funding] options, but Nama is the backstop." McDonagh says Nama's immediate focus is to ensure that all of the sites are in for planning by the end of 2015 and to ensure "coherent delivery" of its plan thereafter.
Whatever planning permission is granted is what has to be delivered, regardless of the developer or owner. Of the 13 docklands sites where Nama has an interest, plans for seven are already under way. Boland’s Mills is one, while some sites are being developed by qualifying investor funds (QIFs), in which Nama is a shareholder.
Another model is captured by Project Wave, which will involve Nama selling a long-lease interest in the 2.37 hectare development site. The plot wraps around the Central Bank of Ireland’s proposed new head office and it is envisaged that 500,000 sq feet of offices and 200 apartments could be developed there.
A number of parties believed to be shortlisted for the site, including a bid from Development Securities and Irish developer Johnny Ronan, who also happens to be a Nama debtor. A winner is expected to be announced before Christmas.
A key long-term benefit for the State is that the docklands is likely to produce a recurring income stream as a result of the partnership arrangements that Nama is putting in place.
This can involve the agency retaining the freehold on a site, from which it receives a percentage of the annual income from the developer or owner, or taking a shareholding in a QIF. This offers the potential for the State to securitise the income stream at some point by selling it on to a pension fund or other investment group.
A business plan for the SDZ sites was approved by the board of Nama in September and a dedicated seven-person asset management team and three planners are focused on this project.
Given that the agency expects its work will be largely completed by the end of 2018, will the agency still be around to see the project through to completion?
Nama chairman Frank Daly said Nama has two objectives: repay the €32 billion it paid the banks to buy certain property loans by 2018, and meet the residential housing and Docklands development mandates set down by the Government this year .
“We are here to kickstart it [docklands development],” Daly says. “To get everything done, you are probably talking at least seven years. Do we fund the building or sell it? Those options come once we have the planning in place. It’s important that you don’t rush in and overbuild. These decisions will be made in time.”