Wednesday 30 April 2008

Developers circle key DIT city centre sites

With the DIT moving to Grangegorman, there is keen interest in its property holdings, including 11 city centre acres, 103,000sq m (1.109 million sq ft) of owned buildings and 17,000sq m (182,986sq ft) of leased space

WELL OVER 92,903sq m (1 million sq ft) of property will hit the market over the next five to 10 years as the Dublin Institute of Technology begins to move onto its new 73-acre campus at Grangegorman in Dublin 7.

Exceptional listed buildings will be on the market for the first time in decades, and leases will be surrendered on prime Dublin office accommodation.

Developers are already expressing interest in a number of properties, says DIT's head of campus planning, Dr Noel O'Connor. "There is a huge amount of interest in the holding and a week doesn't go by without contact from people looking at the buildings. People are interested and they are planning and they are asking," he says.

Its existing holdings, about 103,000sq m (1.109 million sq ft) of owned buildings and another 17,000sq m (182,986sq ft) of leased accommodation, makes DIT one of, if not the largest, private holder of space in the city.

It controls about 11 acres of land associated with these sites, making for a hugely valuable holding, whether viewed simply as building sites or with finished buildings in situ.

The problem for DIT is that all this space and the 39 buildings that make up its holdings are scattered across central Dublin. There is a focus on several main sites but with separate buildings also dotted about.

"DIT is located across six or seven major locations in the city and we occupy major buildings on these sites," says Dr O'Connor. "You have to remember we are the largest provider of education in the country. We have a huge student body of about 20,500 students at all levels. It reflects the scale of DIT but you don't get the sense of it because we are so fragmented."

This fragmentation is also a reflection of how DIT grew over the decades. It opened its doors more than 120 years ago on Kevin Street in October 1887 as one of the city's first technical schools. Other schools opened and gradually some of these began to fall under the remit of the new state's department of education.

DIT emerged from the amalgamation of six colleges about 20 years ago, says Dr O'Connor, some of them former City of Dublin Vocational Education Committee locations. The institute took on its current look with the passing of the DIT Act in 1992.

DIT has since grown by leaps and bounds, with rising student numbers, a widening of DIT's educational award capacity and staff numbers reaching 2,000. This growth has forced the move to Grangegorman, but it should also be a huge benefit to the institute, says Dr O'Connor.

He points out that the Cathal Brugha Street building in Dublin 1 opened in 1941 with about 250 students. Its tourism and catering courses now handle about 2,500 students, he says.

DIT provides awards at apprentice, diploma, undergraduate and postgraduate level. Its new Focas research centre in Camden Row - located behind the main Kevin Street science block - handles no fewer than 100 PhD students working on advanced scientific projects.

The holdings are worth a considerable amount given some of the locations. Kevin Street couldn't be more central and sits on a large site. Cathal Brugha Street is also as central as one can get, sitting literally a stone's throw from O'Connell Street. Bolton Street is also in prime development territory.

Everything DIT holds will come under the hammer, Dr O'Connor says, the idea being that the sales return of these properties and leases would cover a substantial part of the cost of developments at Grangegorman. He would not suggest a possible value for the various properties, and rightly so.

Much of the yield will depend on conditions at the time a site reaches the market, nor would he want to show the institute's hand in terms of cost. And he stressed that the properties would be released on a phased basis, to match the departure of faculties from existing locations to the new campus.

Ronan Webster of CB Richard Ellis applied a quick tot and believes that the holdings would be worth at least €300 million to €350 million. "There is good stuff and there is bad stuff in there," he says. "Much of what is available would need refurbishment."

If one assumes 92,903sq m (1 million sq ft) of space, perhaps 74,322sq m (800,000sq ft) would be useable and this could sell at between €6,459 per sq m (€600 per sq ft) and €10,764 per sq m (€1,000 per sq ft), with a mean of about €8,611 per sq m (€800 per sq ft). That would yield €640 million but it will cost between €3,230 per sq m (€300 per sq ft) and €4,306 per sq m (€400 per sq ft) in refurbishment costs, he suggests. This reduction brings the possible value to a very rough estimate of €300 million to €350 million.

He noted that a number of the buildings were listed structures. DIT indicated that Cathal Brugha Street, Bolton Street and the building adjacent to the library in Rathmines are all listed.

"Office or residential is how you would use these properties," says Webster. The brick building in Rathmines could be subsumed into the library, but Bolton and Cathal Brugha streets would readily convert into residential.

James Meagher of HT Meagher O'Reilly agrees that these properties would readily lend themselves to residential. "If you couldn't get a commercial use you could convert to residential," he says. "You could maybe use it as student accommodation or as a hostel-type hotel."

One significant challenge would be the lack of parking. These are older buildings and do not offer underground space. Nor would it be easy to retrofit underground parking beneath these structures.

The large holding in Mountjoy Square is all leased and this probably won't return anything for DIT, says Meagher, unless the leases are good for more than five or 10 years. Subletting is an option but then DIT would get dragged into property management that is not part of its educational remit, he adds.

There was also the land value associated with the properties. Kevin Street has at least two acres, he suggests. The building is not listed and this was hugely valuable land right on top of St Stephen's Green. "If the buildings are redundant they could be knocked and rebuilt," he says, with the land being much more valuable than any attempt to use ageing office space.

DIT will try to maximise the return on its property portfolio, Dr O'Connor says. "The property here will go towards funding the new development and that is the whole objective. Ten years will see most of DIT relocated. Even in five years you are going to see a major tranche of students up in Grangegorman."

The institute also makes much of remaining in the heart of the city rather than decamping into the suburbs. "We pride ourselves on being DIT and being located in the city," Dr O'Connor says. "The new campus is in the inner city as well. We are not moving out."

And although leaving places with such a long and strong association for DIT will be difficult, staff are ready for a change, he suggests.

"Everybody is looking forward to the new campus. Certainly there will be nostalgia and the buildings have served Ireland well over the past century. But the different faculties are looking for the next generation of facilities. Grangegorman will give them this."

Irish Times

No comments: