New Fine Grain CEO Targets 'Unloved' Offices As Company Looks To Double AUM To €600M

Darragh Lennon took the reins as CEO of Irish-owned institutional real estate investor and operator Fine Grain Property at the start of June — and wants to double the company's assets under management over the next three years.

Lennon outlined how the company expects to diversify across sectors, how it wants to target unloved commercial real estate assets, and why he believes Dublin is primed to break through the €70-per-SF rent barrier at long last.

“It’s hard to find an opportunity that no one else can see. That's a needle in a haystack,” Lennon said in an interview with Bisnow.

“But we've built a strong team here who can operate on the ground, who have deep knowledge from a real estate perspective, and that gives us that ability to execute.”

Lennon was one of the founding shareholders in 2007 of Fine Grain Property, which began life in Singapore before first investing in Ireland in 2015. 

He departed and took senior roles across the Irish financial services and property sectors, returning to the business in 2024.

In a management round robin, founder and former CEO Colin MacDonald moved to executive chairman, focusing on capital formation, strategy and growth, while long-term director Ron Bolger transitioned to chairman emeritus after two decades of guiding the business.

The company manages around 1.2M SF of commercial real estate across 17 properties housing more than 70 multinational occupiers and over 6,000 employees. The portfolio has an approximate value of €300M.

"[Since Day 1,] the premise was to invest in overlooked and undermanaged properties,” Lennon said, adding that the company typically looks for opportunities across different segments of the market.

When it first came back to Ireland in 2015, that was business park assets outside of Dublin. Some large multinational occupiers were underserved, with no professional landlords but strong covenants, paying relatively low rents.

“But actually, they just wanted to be served properly and to do proper placemaking, to upgrade buildings from a sustainability perspective and reposition them, and that's what we did for the first five or six years,” Lennon said.

More recently, Fine Grain has acquired office assets in central Dublin, which Lennon said capital has overlooked, with little liquidity in the market.

“You can acquire them at the right price, which means you can invest in them, which means you can create product, which is very investable from an institutional perspective,” he said.

“That’s how we see the growth plans for us, with a focus on Dublin but also potentially looking at broader strategies where we see opportunities that match our philosophy and match our operational capability on the ground,” Lennon said, adding that the company wants to leverage its existing capabilities.

To get to €600M AUM in double-quick time, he did not rule out investing beyond Dublin but said it is more likely the company will look to other segments, whether that is Dublin residential or logistics.

“We don't have a specific strategy on asset class, but we have confidence that we can operate in other markets in the same way we do in the office market,” Lennon said. 

As an example of the company's strategy, he pointed to Connaught House, which Fine Grain bought in 2024. The 115K SF building is multi-let and is being repositioned with the occupiers remaining in the building. Fine Grain is working to upgrade the amenity, the arrival experience, end-of-trip facilities and HVAC to make it a more carbon-efficient building.

“It’s not easy with them in situ, but it means that those occupiers don't have to move somewhere else while, from our perspective, we keep rent coming into the building,” Lennon said.

“It's obviously helpful from a carbon perspective,” he added. “The embedded carbon benefits of someone not moving are just enormous. The cost to fit out and the cost to move for occupiers can be really expensive.”

While construction costs have added to the challenges, Lennon said a considered and intelligent redevelopment plan can still add up, but some of the assets it holds outside Dublin would be difficult to build now. That means unloved central Dublin office assets are high on the agenda.

“It's assets where we think we can deliver high-quality offices through active repositioning, which prevents people from having to move, which means you don't have that issue when there's a move from a Grade B or C office to a Grade A that leaves the old building effectively obsolete,” he said. “It's then five years for it to come back into the stock.”

Occupier demand in Dublin is also helping to fuel confidence, and although headline vacancy rates remain stubbornly high, the availability of well-located Grade A office space is far lower.

“We definitely see the occupier market picking up. Takeup has been very strong, and I think Dublin remains a pretty competitive market globally,” Lennon said.

Leasing office space in Dublin is about a third of the cost of occupancy of London and half the cost of Paris, he added. And even comparing Dublin against more comparable markets like Berlin and Munich, the city is very competitive against all those benchmarks.

“Often we're looked at against London, but we're so far behind them in terms of rent growth and the cost of occupancy that we become quite an attractive option,” Lennon said.

“There's a meaningful differential, and although there's a bit of a bifurcation across the various submarkets in Dublin, that will converge as space fills up in different locations, and that's a real positive.”

Right now, Fine Grain is keeping an open mind. Neither lot size nor asset class is fixed in stone, and Lennon said the rents that will make development and redevelopment more viable are well within reach.

“Even with rents going up a little bit, there hasn't been real rental growth in the market in the last probably 20 years,” he said.

Space was renting at €65 per SF in 2006, about the same as current levels, and thus there is an opportunity for rents to rise.

“That is about having the right product that will justify those target rents of €70 per SF or above, because actually €5 per SF doesn't really matter if it's the right building with the right amenities,” Lennon said.