The Office of Public Works has agreed in principle to pay a rent of £23.75 per sq ft for a new office building nearing completion off Harcourt Street in Dublin 2.
If the deal is approved by the Department of Finance, it will set a new benchmark rent for offices leased by either a government department or agency. The 18,000 sq ft block being developed at Clonmel Street is earmarked for the Employment Equality Agency, which is to be set up as an independent body under new legislation shortly to go before the Oireachtas.
The 25-year lease agreed by the OPW provides for a break clause in the 15th year. The agency will also be paying an annual rent of £1,500 for each of the 30 car-parking spaces at Clonmel Street.
The OPW has made it clear that it is "not in the business of setting headline rents". It said the rent agreed in this case was still short of the current open market level.
"This was a rare, exceptional case because of the need to rent a building in this particular location", a spokesperson said. The £23.75 rent is, indeed, substantially higher than the levels paid by the State elsewhere in the city.
Although rents in a number of second-generation blocks in the city occupied by State departments have increased by up to 40 per cent in rent reviews over the past year, most of these are still below £15 and £16 per sq ft.
The largest volume of office space taken by the OPW last year, 45,000 sq ft of new accommodation in Belfield Business Park, in Clonskeagh, to be occupied by EU officials, was fixed at a rent of £15.75 per sq ft.
The Clonmel Street rent is also well below the £27/£28 expected to be achieved shortly for a new development of two blocks of almost 90,000 sq ft fronting on to Adelaide Road and Hatch Street. The Hardwicke scheme, the largest available in the city, is due to be completed in June and July next.
Tony O'Loughlin of Jones Lang Wootton says he is not surprised the OPW finds itself in a situation where it is competing at the top end of the rental market. "Presumably the Clonmel Street deal reflects the fact that the OPW has an urgent space requirement and has no choice but to do so at a higher rent level in that location.
The office vacancy rate in the city is at its lowest for over 30 years. Because of the scarcity, the OPW is to develop its own office block, possibly as much as 120,000 sq ft, on a one-acre site it recently acquired at Hammond Lane, near Smithfield.
With the Exchequer funds in a very healthy state, the OPW has also been on the acquisition trail, buying in several office blocks, particularly where they are occupied by Government agencies.
Before Christmas, the State was the under bidder to publican Martin Keane for an office block, Pepper Canister House, in Dublin 2. Mr Keane later sold on the building to a firm of solicitors for a profit of £500,0000.
