Can Hines deliver mixed-use Cherrywood Scheme?
The scale of the 800-acre Cherrywood project is hard to fathom. Cherrywood will be designated a ‘new town’ in the southern suburbs of Dublin by the local authority and a dozen housebuilders will partner with Hines, the main developer behind the scheme, to build more than 5,000 homes by 2023.
Alongside this, 550,000 sq ft of retail has been planned for the scheme and Cherrywood Business Park will provide work for 3,000 employees – Spear Street Capital has bought eight office blocks there for €145m (£132m).
Hines’ senior development officer Derek Rossel describes Cherrywood as “very special in terms of being sought after and having a legacy”. However, with so many developers having dropped out over the site’s rocky history, the legacy so far has been one of fallouts and things falling through.
So why will it be any different this time around?
The Cherrywood site was fought over for years by developers. The most notable of these was Liam Carroll, one of Ireland’s biggest property developers during the Irish property boom, who bought the site in 2002.
But everything ground to a halt during the financial crisis. Then in 2014, international real estate investor Hines, with investment firm King Street, bought it for a rumoured €250m.
With €2.97bn of assets under management, Hines could finally be the developer for the job. “Real estate is local, but capital is global,” says Rossel. “Hines has the serious expertise for such a complex site.”
The variety of partners Hines has brought on board has helped mitigate any risk, claims Rossel. As the project has evolved, different hedge funds and pension funds have cycled in and out depending on their investment criteria.
Pre-crash developers began to develop the infrastructure, including the Luas railway line and Brides Glen station, for Cherrywood before the financial crisis. Hines has continued to build on this. It will be adding three more stations for the 25,000 residents and recently stopped the railway for 72 hours to widen the roads and change the roundabout into a signalled junction. Meanwhile, Seán Harrington Architects, which built the Millennium Bridge in Dublin, is constructing two bridges for the development, the design of which has been inspired by the lead mines that are visible on the horizon.
Around €50m is being invested in roads and infrastructure. The infrastructure it is working on will make it “plug and play for a homebuilder to come in”, says David Murphy, senior development manager at Hines.
The development also boasts three new parks, all with different purposes. The 22-acre Tully Park is historical and features the ancient Tully Church, which is believed to date back to the sixth century AD. A lane that runs through the park will divide the heritage area with church and Celtic crosses from the play area, which will have a skate park and amphitheatre.
Ticknick Park – which has views of the nearby mountains, lead mines and Dublin Bay – will feature five sports pitches and paths connecting to the Dublin mountain way hiking routes. And Beckett Park, named after the novelist and playwright Samuel Beckett who was born there, will have tennis courts, sports pitches and a pavilion.
Hines came up against a range of problems building the parks, from deer tearing up pitches in Ticknick Park during mating season to large granite boulders being dragged out during the construction of Tully Park. With the latter, Hines decided to turn this problem into a positive. The boulders are scattered across the park and have become a “real feature”, says Murphy.
The government has also made Cherrywood a special development zone, making it easier for Hines and those involved to deliver.
Hines is confident that investors, tenants and customers will embrace the scheme. Cherrywood might be a fair distance from Dublin city centre, but it is in close reach of the most affluent areas. Some 1.43 million people live within 30 minutes’ drive, equating to almost 150,000 shoppers and retail spending potential of €1.17bn. Almost 40% of the core catchment area consists of ‘wealthy achievers’. In nearby neighbourhoods Dalkey and Killiney, you can find some of the most expensive real estate in the country – as well as U2 frontman Bono.
Karl Stewart, head of retail agency at Cushman & Wakefield, which is advising on the town centre, says: “This will be the most significant project in the retail sphere in Ireland to be brought to the market for over a decade. Notwithstanding the challenges that exist in today’s market, this is a truly unique product as it will be the centrepiece of a much wider development of residential, offices and leisure and will in effect be the town centre of one of the most significant mixed-use schemes in Ireland.”
The centre is well connected with the Luas railway, underground parking and public cycling facilities including parking, showers and servicing.
“We’re creating a place for social connections, not just to buy socks. Come for everything else – and then buy some socks,” says Rossel. “We’ve made it an authentic experience rather than a shopping mall experience.”
However, question marks remain about demand for Cherrywood’s 550,000 sq ft of retail at a time when the sector is struggling. According to data from Savills, retail rental growth in Ireland fell from 3% in June 2018 to 1.5% in June 2019.
Despite this, Rossel remains confident. “For every sad story about retail there’s a positive one out there,” he says. “We don’t want the brands that might have taken their eye of the ball,” he adds.
Awareness of the site’s fraught past influences the way Hines is operating now. It is co-operating with the local council, community and neighbours to “share their vision”, according to Rossel. “There had been several unsuccessful attempts to commence development in the preceding decade prior to Hines’ purchase so there were some doubts locally that the new Cherrywood would become a reality.
“From early on, it was important to underline and demonstrate our commitment to this project. The engagement is really important and will continue into the future. We meet our near neighbours on a monthly basis and we run open days.”
It seems Cherrywood is moving on from its rocky past. The capital is there, plans are well under way and Cherrywood has the backing of the local authorities. Whether or not Hines manages to deliver this ambitious scheme, it has already succeeded in making more progress on the site than any developer before it has.
By Alex Howlett
Article appeared in Property Week on Thu 29 August 2019