Having hiked the guide price of 87-88 Harcourt Street from €45 million to €52 million in April of last year, agent Savills has reined in its ambitions in a renewed effort to find a buyer for the property.
German-headquartered investor AM Alpha recently walked away from the purchase of the Dublin 2 office building for about €43 million, and the guide price has now been slashed to €37 million.
While the initial 16 per cent hike in the building’s price from €45 million to €52 million had reflected the agreement last April of both a lease extension and a rent increase between its tenant, leading law firm ByrneWallace, and the landlord, joint receivers Luke Charleton and Andrew Dolliver of EY-Parthenon, market sources are suggesting that the same deal may now be acting as something of an impediment.
With institutional investors increasingly focused on ensuring that their property portfolios meet environmental, social and governance (ESG) targets, ByrneWallace’s commitment to occupy the Harcourt Street building until April 2032 with no break option is being viewed by some as an obstacle to addressing the more pressing issue of its relatively poor D1 BER rating.
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The decision to reduce the property’s guide price from €52 million to €37 million may go some way to alleviating that concern. Should a sale be secured at this lower level, the prospective purchaser would be in line for a net initial yield of about 6 per cent, as opposed to the 4.28 per cent that a sale at €52 million would have generated.
87-88 Harcourt Street is a modern office block extending to 53,312sq ft. Situated in a prime city-centre location, the building has a distinctive design with a converted Georgian office to the front and a modern extension to the rear.
The front block, extending to 10,051sq ft has extensive frontage on to Harcourt Street, and features a copper-clad roof and granite-pillared portico entrance. The modern section, which was constructed in the early 2000s, extends to 43,261sq ft and offers views over the Iveagh Gardens.
While fully let to ByrneWallace, it also has potential for expansion, with a feasibility study recently undertaken identifying the possibility to add two additional floors to the rear block, and extending the existing fourth floor for an additional net internal area of 1,375sq m (14,800sq ft) plus a rooftop garden.
ByrneWallace decided to renew its lease last year following a review of its plans for growth and its office-space requirements in the wake of the Covid-19 pandemic.
Commenting on this at the time, managing partner Feargal Brennan said: “With digitisation and new hybrid working arrangements, law firms now need less office space than before, so our plans for growth can be accommodated within the 50,000sq ft we now occupy on Harcourt Street.
“Given local city-centre amenities, we believe it still makes sense for us to maintain a substantial city-centre office location, and this location will continue to be an asset when it comes to recruiting new staff and serving our clients.”
ByrneWallace expects to double its current employee headcount to more than 600 in the coming four years.
