The Ailing Dublin Office Market is to get a major boost with the decision by leading accountancy firm KPMG to seek a large new headquarters in the city centre.
The move has been prompted by the continuing growth of the firm and the fact that the lease on its premises at Stokes Place, at the junction of Harcourt Street and St Stephen’s Green, is due to run out in 2017.
The professional services company is on the lookout for a building of between 13,935sq.m. and 18,580sq m (150,000sq.ft. to 200,000s.ft.). This is the largest single office requirement since Vodafone rented a 24,618sq.m. (265,000sq.ft.) block at Central Park in Leopardstown more than a decade ago.
In addition to KPMG’s 900-strong workforce at Stokes Place, the company has a significant presence in the IFSC, where a further 700 staff occupy a modern office building. Though the lease on that block does not run out until 2022, KPMG’s preference is apparently to accommodate its entire Dublin workforce in the new headquarters.
The company is likely to be paying annual rents of about €7 million for both Stokes Place, which is owned by Treasury Holdings, and the IFSC block, which is held as an investment by businessmen Martin Naughton and Loughlin Quinn.
KPMG managing partner Terence O’Rourke said that, with the lease of Stokes Place expiring in 2017, the company had decided the time was right to begin the process of identifying a new premises. “We have been in the current premises since the early 1980s and, while Stokes Place has served us well, it is now time to look to the future and plan accordingly.”
‘The company has appointed Declan O’Reilly of estate agent HT Meagher O’Reilly to advise it on the move. Market sources suggest there is likely to be a handful of developers in a position to pitch for the KPMG contract, although the number will be fewer than usual because many of the largest players are in Nama and others would have difficulty in securing bank funding for such a major project.
Receivers in control of some of the best sites in the city will also have to decide whether to offer to fund the required office scheme.
With development costs for a new 18,580sq.m. (200,000sq.ft.) office block – apart altogether from the site value and fit-out costs – likely to run to more than €50 million, developers will inevitably be looking for initial rents in the mid €30s per square foot as well as minimum leases of 15 years before they could hope to secure banking support.
Should KPMG opt for a new building, it will have a choice of several sites in the docklands, including one owned by Dunloe next to the State Street Bank on Sir John Rogerson’s Quay, a plot on City Quay also being considered by the Bank of New York Mellon, and several on Spencer Dock owned by Treasury Holdings.
If KPMG decides to remain in the central business district, it is likely to look at the former Alliance building beside the Burlington Hotel, where there is planning permission for a block of 18,580sq.m. Another option could be the former Bank of Ireland headquarters on Baggot Street.