Private investors have beaten the institutions to buy one of the best third generation offices in Dublin 4, writes Jack Fagan.
A small group of private investors has agreed to pay around €48.5 million for a multi-let office investment, Brooklawn House, off Shelbourne Road in Ballsbridge, Dublin 4, in a deal which will show a return of 4.1 per cent.
John Moran of Jones Lang LaSalle is handling the sale for building contractors G&T Crampton which built the block and two others beside it which are owned by the ESB Pension Fund and occupied by Iona Technology.
Several institutions and business syndicates tendered for the investment and, though one of the funds was expected to buy it because of a build-up of savings waiting for a home in the property market, the private sector went one better and pitched well above the guide price of €45 million.
Brooklawn House is regarded as one of the best third generation office blocks in Ballsbridge and has a floor area of 4,089sq m (44,013sq ft) and 39 car-parking spaces. The current rent roll of €1,198,867 reflects an average rent of €497.8 per sq m (€46.25 per sq ft). However, about €270,000 of the rental income is higher than in the remainder of the building to cover the fit-out costs which were handled by the landlord. The tenants include the Higher Education Authority, Bisys and IG International Management.
The 4.1 per cent yield on this sale is one of the lowest for an office building and underlines the immense shortage of good property investments in the Dublin area. Only two years ago office yields at the top end of the market were 5-5.5 per cent. The downward movement in yields is all the more surprising because of the high office vacancy rate in Dublin city and county which is now around 15 per cent. But with the commercial property market set to show returns of up to 25 per cent this year, the search for investment opportunities is likely to intensify over the early part of next year.
The rush to get money into solid property investments has also meant that there has been strong interest in the sale of the Fairgreen Shopping Centre in Carlow which is being marketed by Ann Hargaden of Lisney. Investment sources indicated yesterday that business syndicates have offered well in excess of the €70 million guide price for the centre which is owned by the Northern Ireland businessman Gerard O'Hare of Parker Green who also owns The Quays shopping centre in Newry. He recently acquired a site in Waterford which has been targeted for a shopping centre. The Fairgreen complex was recently extended to bring the overall retail area up to 18,000sq m (193,725sq ft).
Tesco owns the 4,529sq m (48,750sq ft) anchor store while other tenants include Heatons, Argos, River Island, Next, New Look, A Wear, Sasha, Pamela Scott and Game Stop. The centre is producing a rent roll of over €3 million and, once the first round of rent reviews is settled in about two years, it should be showing a yield of around 5 per cent.