Landmark office development to set benchmark for Dublin rents

A landmark office development funded by billionaire businessman Denis O’Brien is to set a benchmark for rents in Dublin.

Leading aircraft leasing company Aercap is to pay €645 per sq m (€60 per sq ft) when it moves into the new six-storey block at the junction of St Stephen's Green and Earlsfort Terrace.

The 25-year lease will include a break option in year 15.

The early letting of the “LXV” block, built on the old Canada House site by Bernard McNamara, at a record rent almost 12 months before it is due to be completed would normally trigger a new round of office developments in the city.

But with bank funding virtually unobtainable at the present, it seems inevitable that construction activity will be confined to a small number of sites.

The highest rent settlement up to now was the €484 per sq m (€45 per sq ft) agreed by Facebook last year for Number 5 Grand Canal Square in the south docklands.

Rents here and elsewhere in the city now face dramatic increases when the typical five-year reviews on leases fall due.

Beneficiary

The St Stephen's Green rent is likely to be matched, if not exceeded, by a planned office development on Burlington Road, Dublin 4, by a consortium headed by Johnny Ronan and Paddy McKillen.

Another beneficiary will be businessman Larry Goodman who is converting the former Bank of Ireland HQ on Baggot Street, Dublin 2, into one of the highest quality office buildings in the city.

The decision by Irish-based Aercap to move its headquarters from the IFSC to the new building on St Stephen’s Green follows its takeover last year of the $7 billion International Lease Finance Corporation to form the world’s biggest aircraft leasing company with assets of almost $40 billion.

It had a fleet of 1,130 planes and another 391 on order since last September.

The company has offices in Shannon as well as Dublin.

Because of strong interest in the LXV block, the capital value of the property will be boosted by at least €12 million.

Neither Paddy Conlon of CBRE who is advising Aercap, nor letting agent Declan O’Reilly of Knight Frank would comment on Wednesday on the new rental agreement.

JLL are the joint letting agents.