Good news for Cork’s property market

Green Reit agrees to pay €58m for Albert Quay office block

Green Reit Stephen Vernon (left) and Pat Gunne. Mr Greene said the yield premium over Dublin is attractive.

Green Reit Stephen Vernon (left) and Pat Gunne. Mr Greene said the yield premium over Dublin is attractive.

 

Signs suggest the rising commercial property market tide, which began lifting Dublin more than two years ago, is now starting to raise a few other boats as well.

Yesterday, Green Reit, the real estate investment trust that floated in July 2013, announced its first deal in Cork. It has agreed to pay up to €58 million for No 1 Albert Quay, a 15,400sq m office block under construction in the city centre that has already been part-let to multinational Tyco and accountants PwC.

Its builder, Cork developer John Cleary’s JCD, is in talks to let the remaining 45 per cent of the block. Green can look forward to yields of 6.75 per cent on the let portion of the building and up to 7 per cent on the space that has yet to be filled. Rents should run at between €3.6 million and €4.1 million per year.

Pat Gunne, chief executive of the trust’s investment manager, said the yield premium over Dublin is attractive, “particularly with the Cork office rental market at an earlier stage in the recovery cycle”.

That is a slightly roundabout way of saying Cork offers good investment opportunities.

The fact that it comes from Green is probably noteworthy.

Although it’s still early enough in its development, the trust thus far seems to have had good timing.

It came to the market at the right time when prize assets such as Dublin’s Central Park, which it now owns, were being readied for sale.

It’s also worth remembering that founder Stephen Vernon’s Green Property avoided the worst of the bloodbath that followed the financial crisis, indicating he and his colleagues are shrewder than others in their industry.

The seller is no mean operator either. Eighteen months ago, JCD sold two blocks at its Citygate development, in Mahon, on Cork’s southside, to Irish Life Assurance for €40 million.

It has leased 33,445sq m (360,000sq ft) of office space over the past two years to the likes of EMC and Qualcomm.

With nearly 51,100sq m (550,000 sq ft) in development, the chances are it won’t be long before it does one or two more deals.