€2.1 billion worth of investment transactions changed hands during the second quarter of 2016, making it the strongest performing quarter ever recorded for the Irish commercial property market. Year-to-date, transactions are almost €1 billion ahead of the record breaking year of 2014.
The staggering level of investment activity can be attributed to the fact that the sale of both the largest ever single retail and office assets occurred in Q2, namely Blanchardstown Shopping Centre and One Spencer Dock. Blanchardstown Shopping Centre fetched €950 million, with Blackstone beating two other bidders for the property which has planning consent for a 272,000 sq ft extension. This latest move by Blackstone, which is the largest real estate owner in the world, is an indication that it sees the Irish retail market as offering scope for growth in a similar manner to the way it benefited from the rental uplift in the office market over the past few years.
In the largest office transaction of the second quarter, One Spencer Dock, which is let to PWC with 16.5 years unexpired, sold for €240 million at a yield of 4.70%. The sale was protracted by the building’s limited marketability due to its large lot size, which was well in excess of the typical asset size for the Dublin office market. The second quarter of 2016 saw continued interest from European Investors, with pan European fund Meyer Bergman teaming up with local partner BCP Asset Management to complete the purchase of Nassau House for €93 million. Meanwhile, Italy’s second largest bank, Intesa Sanpaolo completed the purchase of Harbourmaster 3 in the IFSC for €41 million.
Dublin continues to account for the vast majority of sales with over 90% of investments by value transacting in the capital. Retail accounted for the largest share by sector with 55% of total market activity, followed by the office market which accounted for 36% of activity. Mixed-use and multi-family accounted for approximately 3.5% of the market each.