State will pay €26m rent for near-empty site

A state body will pay €26.4m in rent up to 2034 on near-empty prime offices in Dublin for which it cannot find tenants.

State will pay €26m rent for near-empty site

The Dáil Public Accounts Committee was told Forfás — the State’s business and science advisory policy board — is paying €1.2m in annual rent, rates and service charges on Carrisbrook House on Pembroke Rd, Ballsbridge, whose sole tenant since 2008 has been the Israeli embassy.

State expenditure on the seven-storey building over the next 21 years would cover all of the €17m savings from the scrapping of the bereavement grant or most of the €32m cuts to jobseeker’s allowance in this week’s budget.

Carrisbrook House was used as a headquarters by a number of state agencies over the past five decades including AnCo and the IDA.

It is understood security concerns relating to the presence of the Israeli embassy, which has a sub-lease on the building lasting until 2025, have deterred many prospective tenants.

The PAC heard the State signed a 65-year lease containing an upward-only rent review in 1969.

Labour TD Robert Dowds expressed concern at how the case highlighted “money going down the drain”. He said the property could have been bought when it was put up for sale last year for much less than Forfás will pay in rent over the duration of the lease.

Martin D Shanahan, the Forfás CEO, said he was unhappy with the situation and agreed with the Comptroller & Auditor General that the lease represents “non-effective expenditure”.

However, Mr Shanahan said Forfás was under contractual obligations to pay annual rent up to 2034.

He said it had made every effort to secure tenants as well as exploring all options in terms of its own leasehold on the building.

He said 12 potential tenants had viewed the premises last year but none had opted to rent office space.

Forfás had also made the Office of Public Works, which manages the State’s property portfolio, aware of Carrisbrook House’s availability since 2009.

He declined to comment on Forfás dealings with the Israeli embassy saying it would be “imprudent”.

PAC chairman John McGuinness expressed horror that any state body would sign a 65-year lease without any break clause.

He also pointed out that the OPW had “missed the boat” by not trying to buy the property when it was sold last year for €16m and was “blindly ignoring” the fact that the State was losing €1.2m per annum on it.

Mr McGuinness said the State would end up paying almost double that amount in rent over the next 21 years.

“It raises a number of very serious questions about the State’s ability to manage its property,” he said.

He also criticised the OPW for attempting to claim it had no role in the issue during an appearance by OPW representatives before the PAC in May.

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