Tuesday 22 May 2018

Hotel developments drive Dublin north city renewal

Developer Johnny Ronan's proposed hotel at Spencer Place
Developer Johnny Ronan's proposed hotel at Spencer Place
Oakmount’s planned hotel at Dublin's North Wall Quay

Donal Buckley

Dublin's northside area stretching from O'Connell Street to the Point Village has become the centre of hotel and hospitality development and investment activity in the capital.

This week, Targeted Investment Opportunities (TIO) became the latest developer to announce plans for a hotel, which will be located at 91-94 North Wall Quay near the Point Village and 3Arena.

Close by, the four-star Gibson Hotel was brought to the market two weeks ago. Savills are guiding €87m and as an investment property this reflects a keen net initial yield of 5.12pc.

Meanwhile, next to Busaras, the Jacobs Inn hostel is now believed to be sale agreed. CBRE had been seeking offers in excess of €13.5m for the hostel at Talbot Place. With 428 bed spaces, it is one of the largest tourist hostels, if not the largest, in Ireland.

That this area should become the centre of Dublin's hospitality industry is not altogether surprising as during most of the 20th century and perhaps stretching back further, the area along Gardiner Street and Talbot Street was occupied by numerous guest houses catering for passengers disembarking from ferries. What is new is the driver of demand: what was once termed white-collar workers commuting to the International Financial Services Centre (IFSC) and the Convention Centre Dublin (CCD) conference centre at Spencer Dock on North Wall Quay.

But the focus on Dublin 1 for hotels also appears to be influenced by the preference of other developers to build offices rather than hotels on the south docks, where consequently development land prices appear to be too high for hotel development. This trend also appears to be reflected in the way that southside hotel development appears to be migrating to Dublin 8, rather than Dublin 2 and 4.

So it was interesting to see that TIO's latest plans will lead to a reduction in the scale of the office development that it had previously planned for the site. Its new hotel and office project is due for completion in the spring of 2019.

A joint venture between Oaktree Capital, Bennett Construction and Nama, TIO already had planning for more than 38,000 sq m (409,000 sq ft) of offices on the site but its latest plans will see the office element reduced to 25,397 sq m (273,371 sq ft) while the hotel takes 12,356 sq m (133,000 sq ft).

The project will also mark the firm's first office venture north of the Liffey, as it has focussed most of its office development on south docklands. To date, TIO and Oaktree's northside development activity has mainly focussed on student accommodation projects, which it has sold on to Hines.

Meanwhile, last week Johnny Ronan's Spencer Place Development Company received planning permission for a mixed-use development that includes a 212-bedroom hotel. This is an increase of 43 bedrooms on the previous planning permission that receiver David Hughes had sought as part of a development which included an extension of the former red-brick British Rail hotel on the site.

This project will also include 46,184 sq m (497,120 sq ft) of offices and 873 sq m (9,396 sq ft) of retail/cafe/restaurant floor space around a fully enclosed street, which Mr Ronan says will be "particularly suited to the inclement Irish weather and provide a fantastic space for diners irrespective of what the weather is like".

He took his inspiration for this design feature from the successful Devonshire Square development in London.

Other hotel developments in the pipeline for north docklands include a 58-bedroom hotel at 81-82 North Wall Quay. Oakmount, a company owned by Paddy McKillen Jr and Matt Ryan, started work on the hotel two months ago and it is expected to open in summer 2019.

Already the north docks has as many as 664 bedrooms in three four-star hotels: Jurys on Custom House Quay; The Spencer on North Wall Quay; and The Gibson at the Point Village.

In contrast, south docks have seen just two relatively recent hotel developments with a combined 491 bedrooms at Tetrarch's Marker Hotel and Dalata's Maldron.

Tetrarch is also planning another hotel on the northside at a site just off O'Connell Street and behind Clery's department store and facing the new Marlborough Street stop on the Luas Green Line extension. It will be located at Sackville Place and will provide 107 bedrooms.

Almost next door at Earl Place, Natrium and OCS Properties, led by developer Deirdre Foley, have received the green light for a 176-bedroom hotel as part of the redevelopment of Clery's department store and adjoining warehouse buildings.

Yet another project last month saw property developer and solicitor Noel Smyth submit plans to City Council for a new nine-storey, 365-bedroom hotel on Middle Abbey Street, just to the west of O'Connell Street. His company Fitzwilliam Real Estate Properties intends to also demolish some buildings on Liffey Street to make way for the mixed development.

Just a few hundred yards farther up on O'Connell Street, the 198-bedroom Holiday Inn was the first new hotel to open in Dublin after the property crash.

It will be interesting to see if the British retail investor Hammerson will also include a new hotel on the site of the former Royal Dublin Hotel on the western side of O'Connell Street, which is part of the Carlton site that it acquired as part of Project Jewel.

The City Council will be hoping that all these new hospitality bedrooms and offices will breathe fresh life into O'Connell Street and the streets surrounding it. They may also help lift standards in restaurants. However, from the plans it appears that a number of the dockland developers intend to cater for much of the restaurant demand as close as possible to the offices in both north and south docklands.

Meanwhile, the strength of retail, hotel and restaurant demand in the area is also likely to be boosted by thousands of students moving into new purpose-built student accommodation in the surrounding area. The DIT's centralisation of its operations at its new Grangegorman campus and the commencement of Luas cross city services by the end of this year should also prove to be a fillip for the area.

Indo Business

Business Newsletter

Read the leading stories from the world of Business.

Also in Business