Deals and developments to raise the tone of Temple Bar
The hospitality attractions of Temple Bar, Dublin's main tourist district, are in the course of moving up in the world both in terms of quality and height.
A number of hotels in the area are being upgraded from three or four star, or even four to five star.
In addition, a new record rent of €1m for food and beverage accommodation has been agreed by international entrepreneur Zafar Shah for the ninth and tenth top storeys known as Rooftop Central Plaza, at the redeveloped former Central Bank.
Level 10 extends to 829 sq m and will be the main dining area, with the level below, extending to 768 sq m and accommodating the reception area, bar and back of house. As the combined space totals 17,190 sq ft, the rent averages €58.16 per sq ft, which is only slightly higher than the €58 per sq ft The Ivy restaurant agreed to pay for its 9,578 sq ft Dawson Street premises in 2017.
While the rent per sq ft is approaching those achieved for city centre prime office space, it still looks reasonable compared to the price other food and beverage operators pay for smaller units in the city centre. Some landlords are charging more than €100 per sq ft and Green Reit, for instance, secured €99 per sq ft from Quotidien for the 2,242 sq ft café next to The Ivy at One Molesworth Street.
Mr Shah, who is involved with the Asian cuisine PF Chang, Philliez Kitchen and Paul Bakery, has yet to announce which catering brands he intends to locate at Central Plaza, which is on one of the gateways to Temple Bar. Diners will enjoy views not only of the city but of the night-time action which takes place below them in the tourist quarter.
A further indication of the strength of Temple Bar's market was seen in 2017, when a Davy Real Estate fund bought the Crampton Buildings including the Elephant & Castle restaurant for €11.2m, which was almost €3m more than the price Ardstone Capital and CBRE Global Investment Partners paid for it three years previously.
Crampton comprises 10 separate retail and restaurant units extending to 17,000 sq ft and fronts on to Temple Bar and Crampton Quay. At the time of the Bannon-brokered deal, it was reported to generate €700,000 in annual rents, equating to an average of €41.18 per sq ft.
That also equates to a net initial return of 5.76pc on the block after acquisition costs. Other traders on the Crampton block include Gallagher's Boxty House, Café Nero Ireland and Starbucks.
Currently, a premises at 13 Parliament Street, Temple Bar, is for sale for which Lisney is quoting €2.3m. With a net internal area of about 3,340 sq ft, its ground floor and basement is let to PBR Restaurants Ltd, which operates Fish Shack restaurant. Its four upper floors are let as offices to Belong to Youth and Pixel Design. These offices are accessed from a Crane Lane ground-floor entrance.
With annual rents of €147,500, a sale at the quoted price would equate to a net initial yield of 5.91pc.
Chris Belton of Lisney said that the property benefitted from substantial capital expenditure in 2008 and 2009.
An even more recent deal shows the rise in hotel values. The 27-bedroom Dublin Citi Hotel and Trinity Bar on Dame Street was sold last month for about €11.9m to Singapore businessman Dr Stanley Quek and hotelier and restaurateur Peng Loh. That's more than double the €4.5m which it is reported to have cost previous owner Henciti, headed by Michael, Denis and Paul Hennebry. Located at Dame Street, it looks onto Central Plaza. Its price works out at almost €441,000 per bedroom, which is about 10pc above the 2017 average for Dublin hotels.
Agent Savills acted for the vendors and BNP Paribas Real Estate acted for the purchasers. Because of the purchasers' involvement in upmarket Sheen Falls Hotel in Kenmare, Co Kerry, observers are expecting them to follow the recent trend, which has seen a number of hotels in Temple Bar being upgraded.
Yet another which could see its height increase is the 101-room Temple Bar Inn at 40-47 Fleet Street which is currently for sale. Agent JLL is guiding in excess of €45m.
Its vendor, Heights Hospitality Holdings (HHH), developed it about five years ago from a former office building. In addition to operating income from the hotel, a purchaser will also have the opportunity to generate rental income from Tesco, which operates a store on 11,000 sq ft of its ground floor space and pays an annual rent of €228,000, with inflation-linked rent increases.
While Tesco's rent equates to only about €20 per sq ft, Dan O'Connor of JLL points out that there is medium-term potential for rent increases that could be activated by exercising break clauses.
The purchaser will also benefit from an opportunity to add 85 bedrooms, as it comes with a number of planning permissions for extensions which could also increase its height and bring its overall room count to 186 bedrooms.
A development opportunity for another new hotel has a €4.5m price tag. Known as Shamrock Chambers and located at the junction of Dame Street and Eustace Street, the property currently comprises a five-storey over basement building of 1,746 sq m and stands on a site area of about 0.10 acres.
It is being sold by US fund Grand Coast Capital with full planning permission for a 39 bedroom hotel, by way of the refurbishment and extension of the existing building to six storeys over basement.
Another hotel to be upgraded recently was the 93-bedroom Fleet Hotel, which Patrick Coyle's Windward hospitality group has raised from three to four stars.
The Tifco Hotel chain, which is owned by an Apollo Global Management fund, is also currently developing a new, four-star Hard Rock Hotel, part of it on the site of the former Parliament Hotel almost opposite City Hall.
Also upgraded was The Morgan Hotel, owned by MHL, the group headed by US communications tycoon John Malone.
It will be interesting to see if these new upgrades will lead to a change in the tone of Temple Bar, with fewer hen and stag parties and increased numbers of higher-income guests from both the tourist and corporate sectors.
Mr Shah's choice of restaurant brands for the Rooftop Central Plaza may help to either accelerate or to slow down any such change in Temple Bar's tone,
Indeed, if it this trend continues, more Dubliners may be attracted to the restaurants and bars in the area.