CBRE is offering an unusually high income yield of 15.3 per cent on an office block

it is to sell in Dublin’s south inner city largely because the building is over-rented and its tenant’s lease is due to run out in September 2016.

Willie Norse of CBRE is quoting a sale price of €3.5 million for Joyce House on Lombard Street which is rented by the OPW and used as the office for the registration of births, marriages and deaths. The four-storey over basement investment is being sold on the instructions of Tom O'Brien of Mazars who was appointed receiver to a private company funded by AIB.

The second generation building extends to 1,408sq m (15,157sq ft) and is rented at €560,000 per annum – €381 per sq m (€35.46 per sq ft) – which doesn’t include payments for the nine car parking spaces in the basement.

Whoever buys the block will have a number of options including either regearing or renewing the existing lease with the OPW or, if the State agency decides to move out, a full refurbishment and relaunch on the market.

Rental values up
The strong demand for offices in Dublin 2 and the south docks area should continue to push rental values in the area. The building is a mere 150 metres from the Pearse Street Dart station and Trinity College campus. It will be no surprise if Trinity buys in the block, given its continuing need for extra space and the fact that Joyce House is sensibly priced to sell.

CBRE’s latest bi-monthly research report suggests that the weight of capital chasing property investment opportunities is continuing to drive yields down across Europe – a trend that is very evident in the Dublin market where prime office yields are now in the order of 5 per cent, fuelled by an ever decreasing vacancy rate in the traditional city centre districts.

The fact that Joyce House offers the prospect of increasing its value and generating higher returns will undoubtedly appeal to the various funds as well as to private investors.