Cork sale sets record low yield

OfficeMarket: The sale of Gardner House on the South Mall for €9.7 million shows a net yield of 3.3 per cent, writes Jack Fagan

A new benchmark for an office investment in Cork has been set with the sale of Gardner House at South Mall for €9.7 million - almost €2 million above the guide price.

A local businessman, who bought the block, will have to settle for a net yield of 3.3 per cent, easily the lowest return for such an investment in Cork.

Ann Hargaden of Lisney recalled that the last office investment sold along the South Mall in Cork showed a yield of 6.5 per cent while others in Cork Airport Business Park sold about four years ago yielded 5 per cent.

However, the return on Gardner House will improve once a number of rent reviews are completed. The current rent roll is €325,835.

The six-storey modern building is let to a number of well known financial firms, including PriceWaterhouseCooopers, which occupies about half the space under a long lease.

Gardner House has a net floor area of 1,624sq m (17,480sq ft) and fronts on to the South Mall and also overlooks the River Lee. It occupies a pivotal position beside the traditional retail streets of Patrick Street and Grand Parade.

PWC occupies the first and second floors and has sublet the fourth level to ACC Bank. Other floors are let to Royal Liver and Royal Sun Alliance while Lisney pays a rent of €85,000 for the ground floor.

An antenna on the building owned by Hutchinson 3G brings in an annual rent of €11,500 and negotiations are underway with another telecom company which may install a second antenna on the block.