Facebook is to embark on a further expansion of its European headquarters in Dublin by doubling the size of its offices in the south docklands.
Less than three months after moving into a substantial new building beside the Bord Gáis Energy Theatre, the company has agreed rental terms for an almost similar adjoining block, which will bring its overall office space up to about 23,225sq m (250,000sq ft).
Facebook has been in Ireland since 2009 and is expected to increase its staff numbers which are currently about 500. One of the reasons for the expansion is the availability of international talented staff here.
The Dublin office is responsible for users of the social network site outside the United States – particularly markets across Europe, the Middle East and Africa. Its staff are involved in a broad range of functions from user operations, policy and safety as well as advertising and sales.
Facebook is understood to have negotiated a rent of no more than €376 per sq m (€35 per sq ft) for its first block at 4 Grand Canal Square at the end of 2011, a time when office lettings were few and far between.
The deal included the standard landlord fit-out including ceilings, floors, light fittings and air conditioning. The high profile company subsequently finished off the interior with top-of-the-range furniture and equipment.
With the supply of high quality office accommodation rapidly running out, particularly in the south inner city, Facebook has now moved to reserve the adjoining block, number 5, which is broadly similar to its current premises with an overall floor area of 11,687sq m (125,798sq ft).
Industry sources say the company has agreed a rent of about €484 per sq m (€45 per sq ft) – the newly-struck standard rent for high quality office space in the city centre. The 25- year lease will include a break option around year 13.
Though readily acknowledged as one of the best office developments in the city, Grand Canal Square – developed by Joe O’Reilly’s Chartered Land and currently under the watch of Nama – might have been seen as slow to shift during the recession, but the reality was that O’Reilly and Nama were determined to hold out until the right tenants emerged.
With legal contracts on the latest letting due to be completed soon, Nama and O’Reilly are now planning to sell the two investments shortly as part of a larger portfolio. The two blocks and the underground car parking which comes with them will be producing a rent roll of close to €11 million.
There has been no indication yet of the likely valuations but with any number of funds likely to to be interested, those happy to settle for even a 5 per cent yield can expect to fork out about €210-€215 million.
The three additional office buildings due to form part of the sale include the partially-occupied Block C at the Sweepstakes in Ballsbridge, a 5,109 sq m (55,000sq ft) block probably valued about €40 million, which is owned by the estate of the late Liam May, who was one of the owners of Dundrum Town Centre.
Another adjoining block also developed by Chartered Land at 2 Grand Canal Square was sold last June at an exceptionally strong price – €121 million – a full €41 million above the guide. Irish Life, which bought the block against strong competition, has had to settle for a net return of less than 4 per cent. The eight-storey, 140,000sq m (150,693sq ft) block is clearly under rented at €312 per sq m (€29 per s q ft).
The main tenant, Capita financial Services, is occupying 4,830sq m (51,989sq ft) and is to be joined in the coming months by William Fry solicitors, which will rent 8,639sq m (93,000sq ft) . The overall rental income will also be boosted when a number of ground floor suites are let.