Another office investment held by the defunct developer Treasury Holdings goes on the market today at the junction of Mespil Road and Burlington Road in Dublin 4.
Though the six-storey over basement block is a modest building, the real value for a purchaser will be the opportunity to redevelop the site for a major corporate headquarters.
Dessie Kilkenny of Savills is confident of securing in excess of €16 million for the 30-year-old block at 43-49 Mespil Road which has another four years to run on its lease to the Office of Public Works.
Ulster Bank has appointed joint receivers Sean McNamara and Liam Dowdall of Smith & Pearson to handle the sale which comes more than a month after US investor Kennedy Wilson completed the purchase of 16 more Treasury properties in the Opera House portfolio for €306 million.
Development plans
Treasury had hoped to replace the present Mespil Road building with a high profile headquarters extending to 8,361sq m (90,000sq ft). Its plan to pre-let the building before construction failed once the property market crashed.
Though the planning permission eventually ran out in August, 2010, the 0.19 of a hectare (0.47 of an acre) corner site remains one of the most sought after in central Dublin because of its pivotal location at the entrance to the emerging Burlington Road office district.
The present office building overlooks the Grand Canal on Mespil Road and has an entrance to its basement car park on Burlington Road.
Leading firms on the road include EBS and CBRE while both Bank of Ireland Corporate Banking and BskyB have rented much of the space in Burlington Plaza. The OPW is currently paying a rent of €1.66 million for the 3,961sq m (42,639sq ft) Mespil Road building and 21 basement car-parking spaces.
At the €16 million price being sought by Savills, the investment would show an initial yield of close on 10 per cent and a sale price of €375 per sq ft.
Pre-let possibility
One option for a new owner will be to regear and extend the lease to the OPW.
However, the four-year time scale remaining on the lease might well suit developers looking for a new planning permission and an opportunity to pre-let what will be a substantial development.
There are increasing signs of a scarcity of new high volume office buildings in the central business district even though the overall vacancy rate in the south Dublin suburbs remains above 19 per cent.
The Mespil Road building is likely to be of interest to a range of players including Green REIT, Kennedy Wilson who bought the adjoining Bank of Ireland HQ on Mespil Road as part of the Opera House portfolio, and John Gallagher's Crowneway Investments who recently acquired the Eugene F Collins office block on Burlington Road from Treasury's John Ronan.
Another Ronan property, Connaught House, next to the office block now going for sale, is expected to come on the market later this year.
