Hotel planned on central Dublin site after investor rules offices and housing ‘not viable’

German property investor KGAL plans to replace a Dublin city-centre office block with a hotel after concluding that neither extending the office nor redeveloping the site for housing would be financially viable.The investor’s proposal adds to signs of a shift from office development in Dublin, with Core Capital’s Derek McGrath and Johnny Ronan’s development group also pivoting towards hotel construction.Earlier this month, KGAL’s Irish subsidiary Golden Lane Liffey Limited sought permission from Dublin City Council to demolish 31-36 Golden Lane and build a new midmarket 225-room hotel beside the Radisson Blu Royal Hotel near South Great George’s Street.The property was extensively refurbished after being let to San Francisco tech firm New Relic on a 20-year lease in 2017, but has been vacant since the company moved out last year.READ MOREKGAL said in its application that several options were explored for the site, which included extending the existing three-storey office from 2,800sq m to 6,700sq m across eight storeys and refurbishing the block into 59 apartments or 160 student beds.[ Aviva seeks operator for new luxury hotel on Dublin’s Clarendon StreetOpens in new window ]It added that demolition of the building and construction of a new hotel was the only viable financial option.“Given the current high level of office vacancy rates, the emergence of the ‘work from home’ model and the site’s location outside of the core office districts, the redevelopment of the subject site for office use is not financially viable,” KGAL’s planning application said.Feasibility studies added that a financially viable apartment block would be difficult to build because the site’s “constrained nature” meant it would be difficult to meet residential development standards. Similar constraints “render it not possible” for student accommodation of sufficient scale to be viable.A letter attached to the submission from student accommodation investor Urbanest said the site would need to house at least 200 bed spaces to be viable to run on a cost-per-bed space ratio.KGAL’s application added that there had been strong demand for further hotel accommodation in Dublin based on occupancy across seven competing hotels exceeding 90 per cent in the summer of 2026.[ Tenant exit and flat rents weigh on €300m Dublin office portfolioOpens in new window ]The new hotel proposal has come soon after Ronan Group sought approval to change its redevelopment plans for the current Citigroup building in Dublin’s International Financial Services Centre and replace 40 per cent of planned office space with two new hotels.McGrath’s Renmark Property Holdings Limited also plans to change its development plans for a site near the RDS in Ballsbridge, where it has permission for an eight-storey office block. Last week, McGrath told the Business Post his firm had decided to develop a 244-bedroom hotel and a 194-bedroom aparthotel on the site instead due to uncertainty in the office market.KGAL, which manages €15 billion of assets globally, acquired 31-36 Golden Lane for €25.5 million in 2018 from Peter Leonard and Derek Pippinga’s Mm Capital. The latest accounts for Golden Lane Liffey Limited valued the property at €20.1 million.The building was pre-let to tech firm New Relic on a €1.4-million-a-year, 20-year lease deal in 2017 and then went through an extensive refurbishment before the company moved in a year later. New Relic, which indicated it would grow its Irish headcount from 100 to 300 following the move to Golden Lane, has cut back its Irish office from 117 to 90 staff since 2022 and relocated to new offices on Pearse Street in 2025.