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Inside The €1B Redevelopment Of The Home Of Guinness

One of Ireland’s most famous exports is helping Dublin import capital and interest into its red-hot real estate market from across the globe.

Everyone knows that Guinness tastes better in Dublin. And a host of global real estate giants are vying for the right to undertake a €1B redevelopment of the place where the black stuff is brewed.

Drinks giant Diageo is in the process of selecting a development partner for one of the biggest regeneration projects in Europe right now — the transformation of part of St James’s Gate, the former Guinness brewery in Dublin, into a new 1.5M SF mixed-use quarter of the city.

St James's Gate, Dublin

The level of interest from global players in the site highlights the strength of Dublin’s economy and hence its property market. It also shows how the biggest property firms active in real estate today have a hunger for large, mixed-use redevelopment schemes in fast-growing cities.

Five parties have been shortlisted by Diageo and its advisor Deloitte: Hines, Lone Star-backed Quintain, Irish developer Harcourt backed by U.S. opportunity fund manager Apollo Global Management, Singaporean developer Oxley and U.K.-listed developer U+I. The list will sooner be whittled down to three before a final party is picked by the end of the year.

“It is good to see companies with this kind of capital and expertise looking to invest in Dublin,” Green REIT Chief Executive Pat Gunne said. “Now we just need the politicians and planners to enable higher-density development to take place and address the shortage of residential accommodation.”

The latter comment points to the importance of the scheme for Dublin. The city has the highest gross domestic product growth in the eurozone, U.S. tech giants setting up or expanding European operations in the city and companies relocating from the U.K. due to Brexit, meaning demand for offices and residential is high. Office leasing levels are almost twice the long-term average, and the city is experiencing a housing shortage that is causing prices and rents to skyrocket.

A rendering of what part of the St James's Gate scheme could look like.

But local planning laws do not allow tall buildings, so large sites like St James’s Gate where dense redevelopment can be undertaken are vital to help Dublin grow.

The site has much to entice bidders. As brewing techniques have become more efficient, the amount of space Diageo needs to brew Guinness has reduced, and it has moved its active operations to the northern part of a 49-acre site.

That leaves 12.6 acres of developable land, where there is a master plan in place for 1.5M SF of development. Within that figure is envisaged 517K SF of residential space for 500 new homes; 678K SF of office space; 237K SF of hotel and leisure space including cultural facilities; and 54K SF of retail space.

But within that broad framework, the development partner will have carte blanche to create what Diageo wants to be a new quarter for the city.

“Our partner will bring their own ideas, creativity and ambition, built on the concept that this new, vibrant quarter will open up the gates to residential living, commerce, creativity, entrepreneurship, culture and community,” Diageo said in its request for proposals.

What part of the St James's Gate scheme could look like.

Repurposed historic buildings are hugely popular today, especially with creative occupiers, and the site has plenty of that to offer. Diageo will be retaining some historic buildings on the site, including the original 18th-century house of Guinness founder Arthur Guinness and St James’s Gate itself, famous from adverts and a million tourist photos.

But many of the historic brewing buildings will form part of the new scheme.

“The buildings vary in age, quality and condition but are rich in heritage, history and architectural merit,” Diageo said. “Internally, sweeping staircases and steelwork speak of industrial grandeur and intrinsic historical redevelopment value. These vat houses, brew houses, cooperages, hop and grain stores that were once the pulse of the Guinness brewing operations are now a blank canvas to be reimagined. Tunnels, cobbled streets and train tracks add further opportunity to create a unique development proposal.”

The site is in the Liberties, south of the Liffey and to the west of what is currently Dublin’s main office district. The offices would not be centrally located, but such is the demand in Dublin at the moment that occupiers like Google are being forced to look in the suburbs for office space; new locations are not struggling too much to find takers of space. The state-backed Digital Hub coworking space for startups is about 100 metres away.

The residential element, on the edge of the city centre in a fashionably reimagined historic area, would be highly valuable either as rented apartments or built for sale. Overall, the scheme would be a major regeneration project in an area that is still seen as up and coming.

Part of the historic St James's Gate site today.

“The project has the potential to be a phenomenal new quarter,” U+I Chief Executive Matthew Weiner told the Irish Times. “We are really focused on winning the Guinness project. This is absolutely what we do and there are some great heritage sites involved too.”

If U+I were to be picked as the winning bidder it would likely bring in other international investors to provide capital, and combine this with local expertise. U+I has worked with U.S. investor Colony NorthStar and U.K. pension fund M&G on previous development projects in Dublin, some of which were undertaken with Irish developer Johnny Ronan.

In terms of the other bidders, Hines has set up its own office in Dublin, and is already undertaking an even bigger project there: Cherrywood, a 390-acre development site south of Dublin with planning consent for 3,800 apartments and homes. The first 1,200 are being built as rental apartments in a joint venture with Dutch pension fund APG.

Quintain is the London-based developer owned by U.S. private equity firm Lone Star which is making a big push into the Dublin development market. As revealed by Bisnow, it is undertaking a major build-to-rent project at Adamstown near Dublin that could comprise up to 1,000 rented apartments, and the residential element of St James’s Gate could also be a significant build-to-rent scheme.

Another historic entrance to St James's Gate.

Another tie-up between the U.S. and Ireland is the bid from Dublin-based Harcourt, which is being backed by Apollo. Apollo bought a portfolio of the company’s loans from the Irish bad bank Nama in 2016, and the pair have worked together on development schemes since then. The company is best known in the development world for the Titanic Quarter in Belfast, a major regeneration scheme in the Northern Irish capital that has won multiple awards.

Completing the lineup is Singaporean developer Oxley, which is present in Dublin in the form of the 1M SF Dublin Landings office and residential scheme. That project was undertaken in conjunction with local developer Ballymore; the pair have also worked together in London, and there would be little surprise if the companies teamed up on St James’s Gate also.

There is no timeline for the project — just picking a partner will take Diageo 12 to 18 months. The development itself could take as much as a decade from the beginning of the process last year.

But whoever does get the nod will be taking on the chance to tap into the long-term growth of one of the western world’s most vibrant economies. They will raise a glass to that.