Office space is new final frontier

FIRST IT was developers Ray Grehan and Bernard McNamara offering interest-free loans to tempt buyers to their residential schemes, now commercial developer David Agar has come up with his own novel package of incentives for his €1 billion office development at Grangecastle in Clondalkin, Dublin.

Reacting to the current credit crunch and a lack of commercial tenants, Agar has launched a "let u buy" scheme that will allow businesses to rent office space at his 125-acre Profile Park development, with the option to purchase later, with up to 100 per cent of their rent costs refunded by him.

"The offer is designed to allow clients to acquire the freehold when they can raise the finance," Agar tells me. In addition, tenants won't have to pay service charges. Agar estimates that a company taking 10,000 sq ft of space could save more than €300,000 on their premises costs.

"The market has changed dramatically," Agar adds. "As a result, people are finding it harder to get finance. They need encouragement and need to see that there's light at the end of the tunnel."

With AIB providing funding for Agar's development, is he being squeezed by the lender?

"They want to have their Is dotted and their Ts crossed like any other bank at the moment," he says, "but liquidity is there for the right deal."

Agar has knocked about 16 per cent off his prices but says construction costs have declined sharply due to the downturn in activity to balance this.

Agar admits developers did well in recent years, including himself. "Absolutely, it was there to be got. People were too greedy. They wanted too much. When demand slows down, the prices come down. Things have softened globally but we can live with that and we can still make a profit. I'm looking at the long term . . . This will build out over the next five years."

His frankness is refreshing.