C&AG: Government spent more than €12m on unoccupied office space in 2024

The Distiller’s Building itself had been unoccupied since a lease was first signed by the OPW in July 2022, though it had been subject to two rent-free periods ending in March of last year. File picture:

The Government spent more than €12m on the rental of unoccupied office space in Dublin during 2024.

The two buildings in question — the Distillers Building in Smithfield and Bishop’s Square in the south city centre — had both been either partially or entirely vacant for several years at that time, despite multi-million euro leases being in place.

The former lease, sanctioned by State property manager, the Office of Public Works (OPW), saw some €7.9m paid to the building’s landlord between May 2019 and May 2024 despite its intended tenant, the department of foreign affairs, not taking up occupancy “due to delays with fit-out works”.

A report by the Comptroller and Auditor General (C&AG) into the OPW’s administration of the State’s office portfolio found meanwhile that fit-out costs for the relevant three floors at Bishop’s Square incurred by the State eventually totalled €10.45m — some 45% more than initially sanctioned by the department of public expenditure in January 2019.

Both Bishop’s Square at €7.6m and the Distillers Building at €10m accounted for two of the top three costliest leases on the OPW’s books last year, with the highest — the department of health’s headquarters at Miesian Plaza — costing €10.9m over the 12 months in question.

The Distiller’s Building itself had been unoccupied since a lease was first signed by the OPW in July 2022, though it had been subject to two rent-free periods ending in March of last year.

That building is noted as being subject to fit-out until at least September of 2025, and will be “available for clients to occupy thereafter”.

The C&AG’s report noted that the OPW’s explanation for the delay in occupying the Distillers Building is that it had resulted from “complex design and construction issues”.

That building itself is the subject of the OPW’s highest total financial commitment for a single building across the lifetime of its lease — standing at €221m to be paid up to July of 2047 — out of a total commitment to leased office properties of €1.1bn at the end of 2024.

Paying large-scale leases for vacant properties is not a particularly new phenomenon regarding the OPW’s rental portfolio.

In September 2018 it emerged that just under €16m had been paid to rent Miesian Plaza over a period of 17 months while the building lay empty.

In terms of the OPW’s at times under-utilisation of its own building portfolio, the C&AG meanwhile recommended that the agency should going forward report publicly on the utilisation of those buildings by State bodies, with that reporting to commence in 2027.

The OPW informed that C&AG that it “operates in a dynamic environment which requires the ongoing reallocation of space to meet the accommodation needs of its clients”.

The agency has come in for sustained criticism in recent times over the level of value for money it has been achieving on taxpayer-funded projects.

Last year it emerged that the OPW spent €336,000 on the construction of a covered bike shelter on the grounds of Leinster House, and a further €1.3m on a new state-of-the-art security hut outside the department of finance on the same campus.