The State-owned bank is to save €18 million by relocating workers from its international hub to the Bankcentre in Ballsbridge
AIB HAS extended its lease on the four office blocks at the front of the Bankcentre headquarters in Ballsbridge, Dublin 4, to accommodate staff being relocated from its International Centre in the IFSC and Riverside building on the south docks.
The Ballsbridge buildings were bought in 2006 by property developer Seán Dunne and leased back on a 20-year lease with a break clause exercisable by either party after four years and 11 months. The bank has now negotiated a five-year lease at a rent slightly lower than the estimated €6 million it had been paying since the sale was completed.
AIB is planning to save €18 million per year by relocating “a number of head office functions” to the Ballsbridge site over the next year. The first members of staff to move will be those engaged in the treasury and capital markets functions at the AIB International Centre in the financial services centre and the Riverside buildings on the opposite side of the docks.
The decision to extend the lease on the most prominent Ballsbridge buildings will be seen as confirmation that the State-owned bank will be consolidating its operation in D4. The capital markets business alone has a staff of 2,300, of which about 550 are currently based in the IFSC building.
The bank plans to reduce its overall staff numbers from 14,000 to 12,000 over the next two years.
Dunne is thought to have paid in the region of €200 million for the four blocks and a site at the front along Merrion Road while the remaining four original blocks were bought by Hibernian Life and Pensions for more than €177 million.
Hibernian has since attempted, but failed, to offload the investment blocks which continue to be occupied by AIB on a 20-year lease from 2006.
AIB was one of the original anchor tenants of the IFSC, buying the landmark block in 1988 at the front of the complex which was given a special tax status by the Fianna Fáil government. In 2003, the bank sold on the 9,383sq m (101,000sq ft) building for €78 million to 10 Irish investors assembled by Warren Private Clients.
The bank has confirmed its intention to avail of a break option in the lease and move staff out of the building next year.
Meanwhile the 10 investors have done exceedingly well on the deal, earning a rental income of €5.05 million per year until 2008 – it initially broke back at €478 per sq m (€44.45 per sq ft) – and agreeing at the outset to an automatic increase of 15 per cent to €5.85m.
Warren is expected to encourage its investors to upgrade the building before looking for an alternative tenant. The availability of 137 car parking spaces should make it considerably easier to relet.
The huge increase in the number of financial services and high-tech companies operating out of the docklands area alone has meant that there are nearly always companies looking for additional space in this precinct. At present, Arvato, a subsidiary of the German giant Bertelsmann, and one of the king pins in the world of business process outsourcing, is reported to be looking for more than 4,645sq m (50,000sq ft) of office space following its announcement that it was creating a further 150 new jobs in Ireland.
The company currently employs 600 people in Balbriggan, Sandyford, Swords and Fairview in Dublin.
Arvato is a provider of customer service functions, ranging from credit and collections, merchant services, finance and accounting services.
The large financial service group Citibank is also due to make a decision shortly on where to rent a further 9,290sq m (100,000sq ft) to expand its Dublin operation.
The company is the largest employer in the IFSC and is understood to have narrowed its choice down to Eastpoint in the docklands and Burlington Plaza on Burlington Road.
Other firms on the look out for new office space include Novartas which requires between 4,645 and 6,503sq m (50,000/ 70,000sq ft); Mastercard (2,787 sq m/ 30,000sq ft) and IBM (2,322sq m/ 25,000sq ft).
