It could have been a line from Alanis Morissette’s “Ironic” – He won the lottery and died the next day, It’s a black fly in your Chardonnay , It’s a death row pardon two minutes too late, It’s NAMAized Liam Carroll finally getting planning permission for a building intended to house a bank that is now bust to the tune of €22-40bn.
The development at the junction of Dublin’s North Wall Quay and New Wapping Street has stood as an empty shell since 2008 following legal wrangles over contentiously-granted planning permission. On 30th August, 2010 planning authority Bord Pleanala finally granted permission for the 3-block, 8-storey, 27,832 sq metre development with 80 car-parking spaces at basement level. Other than a judicial review application most likely by Carroll’s old nemesis, fellow developer Sean Dunne, the development can now go ahead. There are various documents relating to the planning application and retention application (the latter under reference PL29N.232580 (Reg Ref 4964/08)) available from Bord Pleanala though the decision from 30th August 2010 does not appear to be available yet, so some of the details above may change.
It was going to be the centerpiece in what the Sunday Tribune called a domestic banking centre beside its international neighbour in Dublin’s IFSC. Liam Carroll reportedly spent €250m buying up land to realize his vision. Now the loan backing the development (said to be €40m from Anglo) is reportedly with NAMA and Liam Carroll’s borrowings would not appear to be in the healthiest of conditions following a failed examinership attempt last year. NAMA is at this minute examining his business plan.
So what will NAMA do? The six options for NAMA are highlighted above though the last one, manage, would appear not to be an option for a partly-complete asset and I would suggest that the market for those willing to take an incomplete building and lease it for a number of years would be limited (though not non-existent, after all if the terms are right then it may be to an investor’s advantage to spend money completing a project and then taking a rent roll for a lease number of years).
With a glut of 782,500 sq metres of vacant office space available in the capital according to Savills in August 2010, will there be a market for another 27,832 sq metres if the development were completed as originally intended? This will be the key determinant of the economic decision by NAMA and from that flows potential buyers or a financial justification for NAMA to develop or demolish (but if demolished, what would be the substitute use – a city farm?). Mothballing would see the retention of this eye sore for years to come, perhaps a decade long symbol of the collapse of the property boom.
Although the Anglo HQ is a high profile asset, NAMA is now being confronted with an array of similar projects. With a limited €5bn development pot (theoretically according to the NAMA Act though there is a concern that NAMA hasn’t put a system in place yet to draw down those funds) and pressure to generate cash, all eyes will be on NAMA as it makes its true public debut -everything up to now has been process, what follows will be what makes or breaks NAMA.
NAMA Wine Lake 
The posting above raises certain questions and misses the point on the amount of “quality” space available.
The question relates to an expectation that NAMA will provide any funding for speculative development. My understanding is that they will provide none. I believe that their announced pot of €5 billion is mainly spin and “smoke and mirrors” and is very limited indeed at this time. It will have to be built up and earned through asset sales and any excess interest earned (extremely unlikely – but that’s another story). So all they have is an ability to provide small amounts of funds to add value to investment properties or nearly completed development projects. They may also provide limited well secured funding to pre-let development projects. So the question in relation to the Zoe block is “can they get a pre-let for the property?”
The answer is dependent on the quantity of existing available quality space, the amount under construction and the take-up level. While 8 million sq ft (I can’t think in metres) may seem a huge overhang, only 3 million is real quality space and this is being absorbed at a current rate of 1 million sq ft per annum. There will be few, if any new developments completed in 2010 and 2011.
Further, as Savill’s have noted in previous office reviews, there is a game of “musical chairs” being played by tenants in Dublin presently resulting in the quality of the vacant stock diminishing, as tenants move into newer units attracted by the favorable terms being offered by landlords.
There are now few trophy buildings available for potential tenants who wish to have sole occupancy or meet their floor plate size requirements. I know of a further uptake of 70,000 sq ft of newly built space currently under contract in Dublin 2 that has not been announced publicly yet. With development of new offices coming to a standstill, options for potential new entrants to the Dublin office market will continue to reduce and this makes a pre-let of the Zoe property a real option within the next two years.
The central point you make about differentiating between prime space (location, large single premises) and the rest in Dublin is well made and NAMA will undoubtedly profile their markets. Will they conclude there is still a glut even of prime space? If you’re right and there’s 3-year’s supply remaining and little being built then maybe they won’t consider there to be a glut. At 300,000 sq ft though (to convert the Anglo HQ to imperial and also assuming the planning permission on Monday last didn’t modify the space) it will still be a challenge to find tenants.
[…] in Dublinthat was, at one time, destined to be Anglo Irish Bank’s new headquarters. There is a detailed entry on the background of the building here, but the potted version of its history is that the iconic 230,000 sq foot partly-built complex on […]