Office | Bannon

Dublin is a top destination for UK firms after Brexit

27th June 2018/in News, Office

Dublin is now the most popular post Brexit location for UK firms over its European peers (Frankfurt, Luxembourg and Paris) in terms of company moves (not staff numbers) according to the latest EY Brexit Tracker. This is despite the perception that the city has lost out to its competitors due to the erosion of competitiveness, lack of residential rental supply, a cautious regulator and limited infrastructure.

The EY Brexit Tracker found that 21 firms (we have broadened the definition and have identified 23 firms) have confirmed they will shift some or all of their operations to Dublin. This places Dublin ahead of Frankfurt, with 12 firms, Luxembourg with 11 and Paris with 8 firms.

Breakdown of Goodbody Data Analysis:

Since the Brexit referendum two years ago, 23 companies have confirmed they are relocating to Dublin due to the UK’s pending departure from the European Union.
Estimated total new roles announced/created – c.1,490;
Using standard space requirements by occupier type, we estimated that the total office space requirement for announced moves is c.355,000 sq ft based on current demand;
This is only a fraction of total occupier demand in the Dublin office market and would compare to less than 10% of total take up in 2017.

Sector Breakdown (Re-locations):

– 57% are within the financial services sector
– 27% are within the legal sector
– 9% are within the insurance sector
– 4% are within the fintech sector
– 4% are within the services sector
– 100% of announcements have been for the Dublin region.

A further 17 firms are noted as planning to increase their presence within Ireland due to Brexit adding at least 1,000 employees to their Irish operations. Such expansions are likely to create demand for a further 200,000 sq ft of office space.

Sector Breakdown (Expansions):

– 82% are within the financial services sector
– 6% are within the legal sector
– 6% are within the insurance sector
– 6% are within the fintech sector

County Breakdown (Expansions):

– 77% are expanding their presence within Dublin
– 12% are expanding their presence in Cork
– 6% are expanding their presence in Limerick

The emerging consensus is that Brexit will not play a significant role in driving office rental growth in Dublin, with existing take-up patterns (Tech dominated) continuing to dominate. Nonetheless, the city has sufficient office space capacity and developments in the pipeline to deal with this additional channel of demand. Furthermore, such moves are welcome in diversifying the occupier base of the Dublin office market and add to an already strong demand base. This is evident in our analysis on estimated office space requirements for the publicly announced moves over the last two years.

Dublin Office Market reported by Goodbody

Depfa Bank and Apex Fund Services to let new Irish Life block

3rd April 2018/in Lettings, News, Office

Irish Life has found tenants for a newly developed office block at the Irish Life Centre on Lower Abbey Street, Dublin 1.

Depfa Bank, formerly based in the nearby IFSC, has completed contacts to lease 1,856 sq.m (20,000 sq.ft) on the third and fourth floors of Block 5 at a rent of €484 per sq.m (€45/sq.ft).

The second tenant, Apex Fund Services, is understood to have made a commitment to lease 1,383 sq.m (15,000 sq.ft) at a headline rent similar to the one agreed with Depfa Bank.

Block 5 has an overall floor area of 3,716 sq.m (40,000 sq.ft) and is finished to a high specification, including a reception area of 1,600 sq.ft. The building benefits from the creation of a new civic plaza to the front.

Depfa Bank is a wholly-owned subsidiary of the German state agency, FMS Wertmanagement.

Apex Fund Services was established in Bermuda in 2003 and has around $350 billion in assets under management.

Deirdre Hayes, head of property asset management at Irish Life Investment Managers, called the wider Irish Life centre campus an integral part of the Dublin landscape. So it was essential that the latest phase provided a quality, sustainable space that met market requirements. “We are delighted with the outcome and welcome both Apex and Depfa Bank as our new neighbours within the development,” she said.

“Great to be involved in another successful Irish Life office project.” – Bannon Office Department

Fitzwilliam 28 brings fresh energy to Georgian Dublin

22nd February 2018/in Development, News, Office

Bannon are delighted to officially launch ‘Fitzwilliam 28’ today, a state-of-the-art office development currently under construction at the heart of Dublin’s historic Georgian core.

Extending to approximately 12,500 sq.m (134,548 sq.ft) and capable of accommodating upwards of 1,200 workers, Fitzwilliam 28 is being delivered by leading contractors PJ Hegarty, along with the adjoining Fitzwilliam 27 on the site of the ESB’s former headquarters on Fitzwilliam Street Lower.

At 13,500 sq.m (145,312 sq.ft), Fitzwilliam 27 will have the capacity for 1,300 workers and is set to serve as the new ESB head office.

Located immediately next to Merrion Square, the overall scheme – which is due for completion in spring 2020 – involves retention and refurbishment of a number of protected Georgian structures and the construction of the two new seven-storey office blocks designed by internationally acclaimed Grafton Architects, and O’Mahony Pike Architects.

The redevelopment of the site, which is effectively an entire city block, was given the green light by An Bord Pleanala in late 2015.

Joint agents Savills and Bannon will be quoting a rent of €619 per square metre for Fitzwilliam 28 based on a single tenancy.

The building’s key features will include:

Near zero energy building
Double-height reception
2,452 sq m rooftop terrace garden
230 bike spaces, 37 showers, 222 lockers

Fitzwilliam 28 enjoys an enviable location just 600 metres from Government Buildings and 900 metres from the Dublin Docklands respectively. The property is readily accessible by the full range of public transport options including road, rail and tram. All three offer regular, reliable services on the doorstep of this office building.

Commenting on the opportunity Fitzwilliam 28 presents for the potential occupier, Savills Ireland chairman Roland O’Connell and Lucy Connolly of Bannon said: “There is simply no similar office development of this scale and flexibility available in the heart of the Georgian core and traditional CBD, close to all amenities and facilities, and certainly not with the sense of place and historic relevance this scheme exudes.

“With the understandable development constraints inherent in this area of architectural beauty and heritage it is unlikely we will see another new office scheme of this scale developed in this location again.”

ESB chief executive Pat O’Doherty said: “Today marks another key milestone in this project and I know that the new building will create a modern, sustainable and innovative office space which will reduce carbon emissions, as well as deliver an attractive commercial property in Dublin’s historical Georgian Quarter.”

Contact Lucy Connolly or Cian McMorrow in our office department today on 01 6477900 for further information.

Article published

Hibernia acquires South Docks office for €28.7m

1st February 2018/in Acquisitions, News, Office

Hibernia REIT plc (“Hibernia”) announces that it has exchanged contracts to acquire 77 Sir John Rogerson’s Quay (“77 SJRQ”) for €28.7m.

77 SJRQ is a six storey office building of 34,400 sq.ft with 20 basement car parking spaces which was constructed in 2004. The building is situated towards the eastern end of Dublin’s South Docks where a number of large development projects are nearing completion. Hibernia is acquiring the building vacant and expects to spend €0.5m on improvement works: including these the purchase price equates to a capital value of €850 per sq.ft for the office space.

Separately, Hibernia has agreed to let the entire building to a subsidiary of International Workplace Group plc (“IWG”, formerly Regus) on a 25 year lease, with 15 years term certain. IWG will pay initial rent of €1.8m (€50 per sq.ft) and will receive nine months rent free: the lease is expected to commence in mid 2018. The net yield will be 5.8% after expiry of the rent free period, rising to 6.3% following a fixed uplift in rent after year five.

Kevin Nowlan, Chief Executive Officer of Hibernia, said:

“We are delighted to be acquiring 77 SJRQ and welcoming IWG as a long-term tenant. The eastern end of the South Docks is undergoing a transformation with several large development projects approaching completion and occupiers such as JP Morgan and Indeed.com joining State Street, Accenture and AirBnB in the area. The simultaneous agreements show Hibernia’s ability to drive value through combining our asset management and deal sourcing capabilities.”

Bannon Capital Markets acquired the building whilst Bannon’s office team sourced and secured the leasing deal to IWG.

Walkers to lease Exchange penthouse in IFSC

31st January 2018/in Lettings, News, Office

The international law firm Walkers will double its Dublin office space when the firm moves shortly to The Exchange at the International Financial Services Centre.

Walkers will occupy 1,781 sq.m (19,178 sq.ft) on the penthouse floor of the five-storey building, which has an overall capacity of 9,986 sq.m (107,500 sq.ft). Walkers will pay a rent of €538 per sq.m (€50/sq.ft) under a long-term lease agreement.

The firm has been based in Ireland since 2010. Its primary focus is to provide the cross-Border market with legal, taxation and listing services. The firm also advises international and domestic financial institutions, corporates and real estate developers on a range of Irish law and taxation matters.

The Exchange was developed by the Cosgrave Group in conjunction with the IPUT pension fund. The new office block fronts on to Mayor Street and is located beside George’s Dock Luas station.

Louise Doherty of Bannon acted for the tenant.

Article

Ardstone Capital clears out last of its Dublin office portfolio

17th May 2017/in News, Office

Ardstone Capital has sold the last of its Dublin office investments amid increasing speculation that office values in the city may have peaked.

In its most recent sale, Ardstone settled on a profit of about €3 million for Block P2 in Eastpoint Business Park. This was sold to Avestus Capital Partners and Ares Management for €12.05 million.

Following its decision to offload its office portfolio and turn attention to the Dublin housing market, Ardstone has had a string of successes – and additional profits of more than €37 million – over the past two years. The company plans to deliver more than 3,000 new houses to the market over three to five years. Its first development is scheduled for Kinsealy next September.

Ardstone bought the Eastpoint office block in 2013 after it had been let to Virgin Media Ireland. The 4,613sq m (49,653sq ft) building has been under-rented for some time. The current rent roll of €647,276 reflects a rental level of €129/sq m (€12/sq ft) and €700 for each of the 71 car parking spaces.

A number of adjoining buildings in Block P2 are let at double that rent level, and many of the other car-parking spaces are also yielding €1,350 per annum.

Donal O’Neill, managing director of Ardstone, said the company was pleased to have made another exit from the office market, which had recovered very strongly over the past four years and has now entered a new phase dominated by core buyers.

Other office assets sold include the eight-storey Velasco office building at Clanwilliam Place, which was bought by Irish Life for €58 million; 2 Harbourmaster Place to German investor Real IS for €53.75 million; and €20.5 million from Credit Suisse for the newly refurbished office block at 100 Mount Street.

More recently, Ardstone sold a retail strip along Morrison Chambers, to Meyer Bergman at a significant profit.

Irish Times

Hibernia buys three office blocks in Dublin for €51m

30th June 2016/in Acquisitions, News, Office

Property investment group Hibernia Reit has acquired three office buildings close to Lower Mount Street in Dublin 2 for €51m.

International property investor London + Regional was seeking about €54m for Blocks 1,2 and 5 Clanwilliam Court, when they went on the market at the end of April.

The buildings, which were constructed in the 1970s, total 93,700 sq.ft arranged over five to six floors above a double basement with 220 underground car parking spaces.

The buildings occupy a prominent position on the corner of Mount Street Lower and Clanwilliam Place, a short walk from Merrion Square and Grand Canal Dock railway station.

According to Hibernia, the buildings are only partially let with a 76% occupancy rate with tenants that include the ESB, An Bord Bia and Hines Real Estate Ireland. The buildings are currently generating rent of €2.9m per annum, equivalent to an average of €34 per sq.ft, excluding parking.

The weighted average period to break and expiry is five years with all leases due to expire by the end of 2021.

Hibernia said the purchase price equates to a capital value of €544 per sq.ft for the office accommodation and a net initial yield of 5%.

“Once fully occupied and post-settlement of an outstanding rent review the contracted rent is expected to rise to over €4m per annum, equating to a yield on cost in excess of 7.5%” the group said.

Report by the Irish Times

Offices Fall Behind Retail and Industrial Sectors in Q1

27th April 2016/in News, Office, Reports

Investment returns from Irish commercial property cooled off in the first quarter of 2016, according to new data from the IPD/SCSI Ireland Quarterly Property Index. Total returns from Irish investment property closed at 2.9% in Q1 2016, down from the 6% recorded in the final quarter of 2015. The twelve-month return for Irish commercial property of 23.5% to the end of March 2016 remains significantly higher than that of the UK which reached 11.7% according to the IPD UK Monthly Property Index.

Industrial property has now emerged as the strongest performing asset class with total returns of 5.6% and capital value growth of 3.6%, reflecting robust levels of rental growth in the sector. Industrial property in South West Dublin performed particularly well in Q1, with returns up 6.5%.

Retail property is now seeing sustained growth, with returns up 3.3% in Q1 driven by rental growth of 2.1%. Performance on Dublin’s two main high streets remains strong, with quarterly returns of 4.3% and 4.2% recorded for Grafton and Henry Street respectively as rental values continue to increase in line with a steadily improving consumer economy. Moreover, the data suggest that the recovery is now spreading beyond Dublin, with total returns from retail property in provincial locations also closing at 3.3% in Q1.

Following stellar growth over the past two years associated with a strongly improving economy and shortage of office space in prime locations, offices are now the weakest performing asset sector registering a return of 2.6% in Q1, down from 5.7% in the previous quarter. Office capital value growth moderated to 1.6% while rental value growth was 2% in Q1.

Muted returns in the first quarter could be a sign of uncertainties among Irish and overseas investors alike following an inconclusive general election result and the impending Brexit vote, the consequences of which on the Irish economy are unclear as yet. Stability will be crucial to maintaining confidence in the sector and ensuring the recovery continues to spread nationally.

Office and retail rents in Dublin to rise by 12%

10th February 2016/in News, Office, Reports, Retail

Prime office and retail rents in Dublin are expected to rise by about 12% in 2016, while residential development land values in the capital are expected to rise by a similar amount according to a new commercial property survey by the Society of Chartered Surveyors Ireland.

Surveyors expect prime office rents in the rest of the country to increase by between 5% to 6% while retail rents are expected to increase by 7% to 8% in Munster and Leinster (excluding Dublin) but by 4.5% in Connacht.

The survey found that investment in the commercial property market reached approximately €3.7 billion in 2015. While this figure is below the record investment level of €4.5 billion achieved in 2014, it nevertheless represents an exceptionally buoyant year for Irish property investment, as all sectors of the market recorded marked increases in activity.

The 2015 property market has seen investment spread more broadly through the regions compared to 2014, when investment was largely focused on the Dublin Region.

Close to 500 Chartered Surveyors were surveyed for the SCSI annual report which was developed and published in conjunction with Future Analytics Consulting.

Office Sector

According to the report there was a 24.1% year on year increase in prime office rents in Dublin in 2015 which reflects the continued demand for city centre locations from new and existing investors, particularly from technology based companies. Positively, respondents also noted an increase in investment activity and a rise in the number of firms that located in suburban areas in 2015, enticed by lower rental prices and newly renovated facilities.

The Review found that prime office rents in the capital were priced at €561 per sq.m at the end of 2015 but are set to increase by a further 11.7% this year.

Regional locations also experienced an increase in office sector demand. Respondents reported a marked increase in activity and demand for office space in the regional cities as the economic recovery resulted in an increase in new company formations and expansions.

This trend is likely to continue in 2016 as respondents predict that prime office rents in Connacht/Ulster will increase by 5.2% and in Munster and Leinster (excluding Dublin) by 5.9% and 6.1% respectively.

Brian Meldon, SCSI Commercial Agency Professional Group Chair, said; “While some respondents are anticipating an increase in supply in 2017, no new office space has been delivered to the Dublin market for the last five years and as a result demand continues to surpass supply. As a result, there are ongoing concerns about Dublin’s ability to continue to attract service sector Foreign Direct Investment in the absence of appropriate office space.”

“Concerns have also been raised by respondents about the lack of housing for potential future employees, as well as access to high quality public transport which could act as barriers to investment in the office sector in the short term. These concerns should weigh heavily on the minds of Ireland’s political parties who will contest the upcoming general election on the back of their plans for further job creation” he said.

Retail

In the retail sector, retail rents in Dublin’s Grafton Street grew by approximately 17.9% in 2015. Rents increased by 16.8% for prime rental in Dublin as Zone A prices reached €5,247 per sq.m. Respondents to the survey expect prime retail rents in Dublin to increase by 11.5% in 2016. In Connacht/Ulster, they are expected to increase by around 4.5% and in Munster and Leinster by approximately 8.0% and 7.2% respectively.

Brian Meldon said rental value growth within the retail sector had increased progressively throughout the course of 2015.“This reflects a strengthening domestic economic recovery and improving consumer sentiment. However, demand in town centres, suburban areas and neighbourhood shopping centres remains subdued and higher vacancy rates will likely remain a challenge within these areas in 2016, despite the positive forecasts for rental value growth”

Development Land

Development land values continued to increase in 2015. Most notably, residential development land increased by 19.7% in Dublin, 16.7% in Munster, 15.1% in Leinster and 10.0% in Connacht/Ulster. SCSI members anticipate residential development land values in Dublin will increase by around 12.1% in 2016.

However, growth in the value of office development land in Dublin surpassed all other development land types in all regions, with a rise of 26.7% in 2015. This growth is set to continue in to 2016 with expected increases of 16%. Notably, Dublin is the only region in which growth in the value of office development land exceeds growth in the value of residential land.

Brian Meldon said the increasing demand for housing and office units has strongly contributed to a growth in development land activity.

“Development finance remains the biggest single issue in ensuring additional new residential and commercial units are built over the short-term. Many contractors are reportedly experiencing very limited access to finance, with lending of only 30% to 50% being offered by financial institutions; with high interest rates and other inputs adding further to development costs. Ensuring the availability of development finance for measured speculative development, as well as speeding up the planning system will address supply issues and create a more sustainable market.”

Industrial

The industrial sector also experienced positive growth, and while much of this was focused on the Dublin market, the Munster Region experienced the greatest levels of rental growth, albeit from a low base. In Dublin, prime industrial rents under 500 sq.m increased to €84 per sq.m, representing an increase of approximately 2% year-on-year, while secondary rents on properties over 500 sq.m increased by 34.1% to €55 per sq.m.

“Industrial rental values continued to strengthen in 2016. Demand was strong for logistic-type properties, as the logistics networks expanded to meet the growing online retail phenomenon. There is an undersupply of these large-scale, modern logistic-style units, and build costs for such units remains high, undermining the financial viability of any speculative development” Meldon concluded.

Survey by SCSI

DAA business park acquires ESB International as early tenant

18th November 2015/in Brochure, Lettings, News, Office

The Dublin Airport Authority (DAA) has had early success with its new business park beside the airport with the completion of legal contracts to lease the former Aer Lingus headquarters to ESB International (ESBI).

The new tenant is to move from offices on St Stephen’s Green to the former airline HQ which is undergoing a radical redevelopment at a cost of over €10 million. The 45-year-old block is to be given a grade-A specification, an A3 energy rating, a new triple-glazed façade, much improved insulation and a T50 broadband service throughout.

Rent saving

ESBI has agreed a rent of about €297 per sq.m (€27.60 per sq.ft) for the gross area of 7,524 sq.m (81,000 sq.ft) – probably a significant saving on the rent it is paying Irish Life for about 7,432 sq.m (80,000 sq.ft) in Stephen’s Court beside the former Anglo Irish bank HQ on St Stephen’s Green.

Irish Life is expected to upgrade the block and put it back on the market at an even higher rent given its prime location and the shortage of high volume space in the south inner city. ESBI rents the St Stephen’s Green offices on several leases close to running out. The six-storey-over-basement block at the airport is expected to be ready for fit-out early in the new year. The long-term lease includes break options in years five and 10.

Lucy Connolly of the Bannon agency handled the letting along with BNP Paribas Real Estate. Michael Healy of Savills advised the new tenant.

ESBI is a leading global engineering consultancy specialising in energy-related projects. It employs more than 700 staff across operations in Europe, the Middle East and Asia.

DAA originally set a long time frame of 25-30 years for its 70-acre business park but, after the earlier-than-expected success with the old Aer Lingus building and a favourable response to the marketing campaign highlighting its strategic location, insiders believe that it is only a matter of time before it unveils its plans for the next phase of four blocks with an overall floor area of 37,160 sq.m (400,000 sq.ft).

The airport business campus has considerable advantages over most parks in the Dublin area because of its superb road system and the fact it is serviced by no fewer than 1,500 local and national bus and coach movements on a daily basis.

The park is set to benefit from the airport’s direct links with Europe – there are about 108 daily flights to and from London alone – as well as America and the Middle East.

The ambitious plans by the DAA to broaden its revenue base through the development of a top-of-the-range business park comes after Manchester and Schipol (Amsterdam) airports also signalled their intention to open up their campuses to commercial property tenants wanting to avail of the wide range of support services.

Article in the Irish Times

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