B of I seeks record £1m key money for offices

BANK of Ireland (B of I) is seeking a premium of more than £1 million for office space in Dublin - a record for the city. The offices in the Earlsfort Centre, opposite the National Concert Hall, at Earlsfort Terrace, Dublin 2, are being vacated by Lifetime Assurance, a subsidiary of the bank.

One of Dublin's largest firms of solicitors, Arthur Cox, is in advanced negotiations to take the 55,000 square feet of offices.

The £1 million-plus key money reflects part of the cost to B of I of fitting out and furnishing the office space, which will be available to the next tenant.

If Arthur Cox moves into the Earlsfort Centre, it is thought unlikely that it would be prepared to pay anything like the £1 million sought because of the difficulties in the Dublin market of assigning such a large volume of space to a high-quality tenant.

Arthur Cox occupies more than 30,000 square feet in four buildings on St Stephen's Green, two of which the company owns. One of the others is owned by New Ireland Assurance Company.

Ian French of Hamilton Osborne King is handling the assignment for the bank and Bill Nowlan is advising Arthur Cox.

B of I's decision to transfer the assurance company staff to its headquarters building at Baggot Street forms part of a wider programme of cutbacks on office accommodation. The bank will save annual rent of more than £800,000 in the Earlsfort Centre - the equivalent of £15.25 per square foot - as well as service and car-parking charges.

The assurance company's lease at the Earlsfort Centre has more than 20 years to run and is subject to five-yearly rent reviews.

Last March the State-run Irish Medicines Board paid a premium of £150,000 for over 22,000 square-feet of office space in the Earlsfort Centre vacated by computer software company ACT Kindle.

Seeking such a large premium will not surprise the office market because of the immense scarcity in the city of modern office space particularly units of more than 20,000 square feet. Several large office blocks planned for Dublin have been put on hold until the developers agree pre-letting terms with the tenants.

Although the volume of vacant office space is now below 5 per cent of the total, most developers are refusing to build on a speculative basis because of cyclical nature of the office market.

Apart from assigning Lifetime's space in the Earlsfort Centre, B of I is also selling a 23,000-square-foot building at Burlington Road, which is to be vacated next October by Bank of Ireland Finance. The block is expected to make around £4 million.

The bank is also planning to sell a 25,000-square-foot modern building occupied by Irish Civil Service Building Society at Westmoreland Street and D'Olier Street.