Georgian buildings enjoy revival after doldrums
The sale and leasing of Dublin Georgian buildings enjoyed a revival in the past 12 months after more than three years of low demand.
Georgian Dublin is usually one of the first sections of the office market to suffer with economic downturns. This trend was exacerbated by the preferences of many occupiers to locate on single-floor plates in modern office buildings.
In contrast, during the early 2000s the Georgian sales market performed well, boosted by the interest of both owner-occupiers and investors. Indeed, one of the highest prices achieved was for 31/32 Fitz-william Square, which sold by tender in December 2006 for €13,111,111, well over the guide of €10m. This price equated to €1,611 per sq ft.
An analysis of Georgian sales in 2005/2006 shows prices ranging from €700 to €1,600 per sq ft being achieved for prime Georgian squares and streets.
This reflects how Dublin's commercial property market also developed for decades around St Stephen's Green, Merrion Square and Fitzwilliam Square in the very centre of Georgian Dublin.
Consequently, Georgian Dublin has consistently provided prestigious, well-located commercial properties that are home to some of our leading legal, investment, wealth management and accountancy houses and suit a wide number of occupiers.
However, the period between 2008 and 2011 saw very few Georgian property transactions on the open market. Then, in 2011, interest began to pick. It increased last year when a large number of freehold Georgian office properties were sold.
Knight Frank Ireland was involved in a number of these sales, and we found that the viewer profile was dominated by owner-occupiers and families looking for a city centre home.
The above graph shows that the average sale price last year was €250 per sq ft. That is based on the sales over the 12 months of 2012 which ranged from €178 per sq ft in Merrion Square up to €336 per sq ft in Pembroke Road, although those prices would have reflected factors other than simply the locations.
During the boom, rents of between €30 and €40 per sq ft per annum, and €3,500 to €4,000 per car space per annum, were secured for Georgian office buildings in 2007. Even higher rents were achieved for those in immaculate condition and located on prime squares.
As might be expected, rents are currently below those highs. Nevertheless, the market is performing relatively well, with rental levels increasing throughout 2012. Evidence shows leasing transactions recently averaged €15 per sq ft. Furthermore, entire, well-presented Georgian offices on good streets and squares are achieving in excess of this figure, and recent offices in Fitzwilliam Square achieved rents of €18.50 per sq ft.
In line with the current general office market, lease terms are also shorter, and repairing obligations have been mitigated.
Occupiers include those who are seeking attractive own-door offices in prestigious city centre locations, and those who cannot find suitable modern offices.
Georgian buildings provide occupiers with a prestigious address and image. However, such an image is only sustained once the internal grandeur of the premises matches that of the exterior. Consequently, period features such as original fireplaces, cornice work and im- pressive entrances are important.
Investors should remember that in good and bad times, Georgian properties will suffer when landlords do not put the necessary capital into the buildings.
On the otherhand parking can prove to be an advantage for attracting tenants. With city centre car parking ratios restricted for buildings constructed in the past 10 years, many Georgian properties can have the advantage of offering more car spaces than some modern offices.
Aisling Tannum is head of office agency at Knight Frank Ireland