Offers of over €80m sought for Royal Hibernian Way – Business Post, September 6 2020
The famous retail thoroughfare on Dawson Street in Dublin 2 is one of the most sought-after locations in the capital
The Luas Cross City line passes directly outside the entrance to Royal Hibernian Way on Dawson Street. Photo: Peter Moloney
Aviva Life and Pensions Ireland DAC (Aviva) have brought a prime investment opportunity to the market in the guise of the well-known Royal Hibernian Way on Dawson Street in Dublin 2 for which its joint selling agents are guiding in excess of €80 million.
The mixed-use development comprises about 8,630 square metres, in one of the most sought-after locations in Dublin city centre.
This prime location provides a link through the recently upgraded retail mall, from Dawson Street/Molesworth Street to Grafton Street, Dublin’s premier retail avenue. The Luas Cross City line passes directly outside the entrance to Royal Hibernian Way, with the stop a one-minute walk from the entrance.
JLL and TWM have been appointed joint agents. According to them, this core real estate opportunity provides an investor with the benefit of immediate cashflow together with significant future development potential.
The Royal Hibernian Way comprises approximately 6,689 square metres of office space benefiting from excellent profile and frontage onto Dawson Street.
The majority of the office space of approximately 6,132 square metres is the headquarter building for Davy Stockbrokers. The remaining office space, located at 12 Duke Lane, is currently intentionally vacant as planning permission has already been achieved to double the size of the building.
The retail quarter extends to almost 1,951 square metres of retail and hospitality space, all of which has been recently upgraded. The mall includes high-end retailers such as Boylan’s Shoes, Carol Clarke Jewellers and Leonidas Chocolates.
Given its heritage as the old Royal Hibernian Way hotel site, there is also a strong hospitality offering, including the Lemon and Duke bar owned by Noel Anderson and his business partners, former Ireland rugby internationals Sean O’Brien, Jamie Heaslip and Rob and Dave Kearney; as well as the renowned Marco Pierre White steakhouse, Isabelle’s restaurant and the recently opened Argentinian steakhouse, Gaucho BAH33°.
This retail quarter has benefited greatly from a major refurbishment and rebranding project and the Royal Hibernian Way now offers a modern high-quality destination for retailers and restaurateurs alike.
The shopfronts have a new distinctive look, framed in anodized aluminium in a brass and bronze colour with large glass shop windows adding to the vibrant streetscape. The development will be further enhanced by some high-quality upgrade work that is planned by Dublin City Council on the surrounding streets.
The overall annual passing rent is approximately €2.78 million per annum. However, there is scope to significantly increase this rent by leasing the vacant retail units where there is active tenant demand, or where they have been kept vacant to facilitate the redevelopment of 12 Duke Lane.
There is also an imminent rent review on the Davy’s office space. Recent evidence in the market suggests that the rental level for this space is in the region of €50 per square foot (or about €538 per square metre), or higher. This is a discount to rental levels achieved for newer office buildings within 100 metres which have achieved as high as €70 per square foot (some €754 or so per square metre).
In addition to extending 12 Duke Lane, an incoming purchaser has a number of other options for further redevelopment and repositioning to bring the property to the next level. Significant investigations and feasibility studies have been undertaken by Aviva over the past number of years.
There is scope to significantly increase the overall floor area of the existing office space, subject to planning as parts of the building extend to five floors over ground level while other sections extend to only three storeys over the retail. There is also scope for internal modifications and to link the rear block with the front blocks to provide a single floor plate centred around the open walkway.
Suzie Nolan, head of property fund management at Aviva, said: “We have decided to strategically dispose of this asset and redeploy the proceeds into other value-add redevelopment projects or to potentially allow us pursue acquisition opportunities.
“Royal Hibernian Way is held by Aviva on behalf of life and pension policyholders in the Friends First Irish Commercial Property Fund. The Fund is performing well, being top of the peer group on a one, three and five-year basis [as at 30 June 2020 – source: Financial Express].
“The relative outperformance has been driven by our strategic active management initiatives carried out by the team, including the significant redevelopment of Enterprise House and the refurbishment of Trident House, both in Blackrock; the refurbishment and subsequent disposal of 23 Shelbourne Road, Dublin 4 and the upgrade of Royal Hibernian Way retail mall.
“Royal Hibernian Way is the largest stand-alone asset in the fund and, with the increasing value and scope to further develop the site, the property would represent a high percentage of the overall portfolio. Our next redevelopment project is the site on Merrion Row, Dublin 2 comprising four adjacent properties, including the Unicorn restaurant. This project is currently going through the planning process, and subject to permission being granted, the Aviva property team expects to commence the project in mid-2021.”
Peter Hester, head of acquisitions and disposals at Aviva, said: “This is an exciting opportunity for an investor seeking a prime development in an excellent location, with the added advantage of further redevelopment potential.”