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Santry office block with high running yield and solid tenants on offer for €9m

The modern five-storey over basement office building has 93 per cent occupancy, sustainable credentials and offers an estimated annual rental income of over €1 million.

QRE Real Estate Advisers has relaunched the office investment sale of Northwood House in Santry in Dublin 9 to the market after successfully implementing an asset management plan. The agent is guiding in excess of €9 million for the investment.

The value extraction plan was implemented over the last 12 months and has added more than €100,000 per annum to the rent roll while also improving the rental tone in the building.

The property comprises a modern five-storey over basement, third generation office building providing income from 24 office suites and extending to 4,129 square metres gross area, along with 115 surface and basement car parking spaces.

Existing occupiers such as Shell, Mazda, Amdipharm, Celtic Anglian Water have renewed their commitment to the building and have been joined by new occupiers such as UFO Drive, while it is understood that further new tenants have agreed terms.

Built in 2008, Northwood House is a well-maintained office building providing flexible floorplates of between 130 to 446 square metres, with raised access flooring, zoned gas-fired central heating, kitchenettes and WCs to each suite. A number of units feature air conditioning as part of a tenant fit-out. Private glazed balconies are provided to each suite above ground-floor level.

Over the last year, this part of the Northwood Campus has seen a development transformation in advance the proposed Metro Line where a stop is proposed a short walk away.

The development of residential, student housing and commercial elements on surrounding sites around Northwood House has improved the critical mass, which will be further enhanced by a proposed 263-unit PRS scheme with ancillary commercial accommodation directly adjacent.

The location is already well served by a choice of public transport options and Northwood benefits from the Dublin Port Tunnel and the planned Metro North line, which are both on the doorstep of the campus. Existing corporate occupiers within the campus include Electric Ireland, BMW, Regus, Affidea, Greencore and Santry Sports Surgery Clinic, with Europcar, Ikea and Decathlon located nearby.

QRE’s guide price represents a significant discount to 2021 pricing when the property was last on the market. It reflects a net initial yield of 9.77 per cent (allowing for standard purchaser’s costs of 9.96 per cent) based on a rent of approximately €970,000 per annum, significantly higher than the 2021 level showing the occupational resilience of the building’s income and the loyalty of the majority of the tenants.

The property is currently 93 per cent occupied. With an estimated rental income of over €1 million, this shows a reversionary yield of over 10.5 per cent upon letting of two small vacant suites.

The new guide price reflects a capital value of €202 per square foot, which is significantly lower than replacement cost. Importantly, the BER ratings throughout the building range from B to C and are hence attractive from a sustainability and capital expenditure perspective.

Jonathan Hillyer and Bryan Garry of QRE, who are handling the sale, said: “The asset management initiatives and leasing activity completed over the last year at Northwood House have borne out all the opportunities highlighted back in 2021.

“Existing tenant loyalty, a shortage of competing space and a sustainable and well managed building to attract new tenants have provided the vendor with a superb running yield akin to present shopping centre yields without the heavy management, a perfect income hedge for the new purchaser in these inflationary times.”

For more information contact the agent at 01-6375555.

written by Sunday Business Post

May 2023