Work is due to begin soon on the redevelopment of the former Clerys department store on Dublin’s O’Connell Street, which has lain empty for four years.
The remodelling of this iconic building has the potential to spark a revitalisation of O’Connell Street, and with joint developers Europa Capital, Paddy McKillen Jr, and Core Capital, I suspect it is in the right hands.
On a recent visit to London, I had the pleasure of dining at ‘The Ned’ and, on entering, all I could think of were the parallels with the redevelopment of Clerys.
The Ned is now a 250-bedroom hotel with 10 restaurants, located close to St Paul’s Cathedral in The City, on the north side of the Thames.
The location was an evolving, but neglected, business district, with little to offer by way of hospitality, while The Ned was an abandoned, architectural masterpiece, designed by Sir Edwin ‘Ned’ Lutyens. The 29,450 sq m building had last been used as a banking hall. The redevelopment is stunning, and has been central to reviving fortunes in the area.
The massive ground floor banking halls are occupied by open-plan, mid to upper-end restaurants, with a jazz band playing in the middle.
The hotel is overhead, and, as with the Clerys proposal, has a rooftop hospitality area overlooking the city.
In another parallel with Clerys, the development was a joint effort between a local developer (Soho House) and a US developer, New York’s Sydell Group.
The developers saw an immediate similarity between the location and the once-neglected, north Madison Square area of New York City. The developers’ hotel and hospitality development there turned the area into a ‘destination’.
There is probably no one in Ireland with their fingers closer to the pulse of the hospitality industry than Paddy McKillen Jr and his Press Up Entertainment Group. The scheme, now known as Clerys Quarter, represents both a potentially-profitable project, and also an opportunity to make a lasting contribution to Dublin, by implementing a bias for quality, and getting this exactly right.
The planets would appear to be lining up for the project. There is a severe shortage of hotels in the city centre and the offices on the upper floors will be well-timed too. The Luas runs past both the front and back doors. The developers have apparently taken some guidance from Selfridges’ refurbishment of their Oxford Street department store in London, and I’d be surprised if they haven’t been looking at The Ned too.
Retail uses are proposed for the basement, ground and first floors at Clerys Quarter, but, with weakness in the retail sector, this may be the only component of the mix causing second thoughts.
A shift towards the booming hospitality market, and including more middle to upper-market restaurants, may be the perfect solution. Ask Ned!
But the biggest factor is the uncertainty that is stalking our economy, and to some extent, our property markets too.
Chatting with developers, there is no doubt that the system — from banking through to contractors — is beginning to delay committing to large-scale investment decisions.
The hottest sectors of our market now, offices and logistics, are probably exceptions, and it’s hardly a coincidence that they are the two areas most likely to benefit from Brexit.
For the rest of the market, with a general view that we are late in the value cycle, and with interest rate and geo-political concerns about too, it’s no surprise that the Brexit factor has become a reason to delay commitments.
The UK is badly affected and in an Urban Land Institute survey, three-quarters of 885 real estate professionals are predicting further declines in values there, this year.