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Boomtime for Cork property

Investment transactions in the southern capital have increased significantly in the past year and further strong growth is forecast

“Of all the regional centres, Cork has witnessed the largest change in prime yields over the past 12 months,”

“Of all the regional centres, Cork has witnessed the largest change in prime yields over the past 12 months,”


Investment transactions in Cork are rising sharply – from about €56.5 million in 2016 to €187 million last year. According to CBRE, of the €930 million spent on commercial property countrywide in the first quarter of 2018, about 11 per cent (or €102 million) was in Cork. So investors are still exploring investment opportunities in the southern capital and, as a result, there has been strong yield compression.

“Of all the regional centres, Cork has witnessed the largest change in prime yields over the past 12 months,” according to Cushman & Wakefield. “At the end of June 2018, prime yields stood at 5.65 per cent – down 35 basis points from the same quarter in 2017. This is not surprising given that the volume of investment activity in Cork has increased significantly over the past 18 months. Forecasts for the year-end show further inward movement, with yields expected to reach 5.5 per cent by the end of 2018.”

Office market

Cork’s office market is the star performer. Headline rents are up more than 11 per cent over the past year and take-up in the first half of 2018 was 35,550sq m (382,657sq ft) compared to 8,250sq m (88,800sq ft) in the same period last year – that’s a whopping increase of about 430 per cent.

According to Cushman & Wakefield, prime office rents in the city now stand at €350 per square metre (€32.50 per square foot). Marian Finnegan, chief economist at the agency, says that due to strong demand and falling supply, “gradual rental growth is forecast to continue out to 2020, where rents will stabilise thereafter”.

Finnegan says supply levels in Cork have declined by 4.3 per cent over the past 12 months to stand at 55,600sq m (598,473sq ft) at the end of June. “This resulted in the vacancy rate falling to single digits for the first time in a decade, to 9.5 per cent from 10.2 per cent at the mid-point of 2017. But, when signed and reserved space is excluded, the net vacancy rate falls to 6.7 per cent.”

However, the recent strong take-up figures for offices in Cork have been somewhat skewed by Apple’s occupation of its 15,800sq m (170,070sq ft) extension to its premises in Hollyhill. But, even deducting that, take-up so far in 2018 is 240 per cent ahead of last year.

Other recent deals include the OPW taking 1,250sq m (13,455sq ft) at the former ACC Bank unit at The Elysian; Clearstream pre-letting 8,350sq m (89,879sq ft) at Navigation Square in the city centre; No 85 South Mall (measuring 4,300sq m/46,285sq ft) is now fully pre-let to KPMG and Forcepoint; and Voxpro has agreed to lease 3,530sq m (38,000sq ft) by way of an assignment at City Gate in Mahon. These recent lettings would suggest a shift away by occupiers from the suburbs and business parks towards urban centres.

Aoife Brennan, director of research at Lisney, says high-end serviced office provider Glandore has agreed to lease 850sq m (9,149sq ft) at City Quarter on Lapps Quay. “Republic of Work was the first serviced office provider to enter the Cork market, occupying part of 12 South Mall in 2016,” she says. “This sector has begun to make a greater impact on the market and is something we expect to see more of in the short- to medium-term, as is the case in Dublin.”

Serviced office providers are certainly the talk of the town in Dublin, where one commentator, James Meagher of Knight Frank, says the co-working model accounted for about 6.5 per cent of the market in 2017 – four times more than 2016 – and could account for 15 per cent of office take-up in Dublin this year.

Much of the demand for space is coming from the IT sector, which accounted for 85 per cent of transaction volume in the first half of 2018 – strongly up on its 51 per cent share of the market for the whole of 2017. A large part of this is coming from overseas companies setting up their first office in Ireland or expanding their existing operations.

It must be remembered that, while most tech companies start out small, they can grow at a frightening pace. Facebook opened a Dublin office with 2,000sq m (21,528sq ft) in 2009 – it now occupies 39,000sq m (419,792sq ft) and is strongly rumoured to be considering building a new campus opposite the RDS to accommodate its future growth. Google, meanwhile, began operations in Dublin in 2003 with 460sq m (4,951sq ft) and is now committed to 73,000sq m (785,765sq ft) with a rumoured 37,00sq m (398,264sq ft) under consideration. The internet search giant occupies about 4 per cent of Dublin’s office space.

“If Cork is to continue to attract international tech companies, then top-quality accommodation must be available at any given time,” says Brennan, who points to 26,900sq m (289,549sq ft) of office space being under construction at the end of June this year. Work on a 2.46-hectare site on Horgan’s Quay to provide 29,000sq m (312,153sq ft) of office space is expected to start before the end of 2018. Another 163,250sq m (1.757 million sq ft) of office space across 10 locations is going through the planning process.

Most of the new space planned is for Cork Airport Business Park, City Gate Mahon, Westfield Office Quarter, Ballincollig, Eastgate Business Park in Little Island, Sullivan’s Quay, Camden Quay and Anderson’s Quay.

Lisney predicts that office vacancy rates will continue to fall during 2018 given that new-built offices are mostly pre-let and more office developments should start construction “with pre-lets currently being sought”.


The big news in Cork’s retail market at present is that Wilton Shopping Centre – the second biggest in the city after Mahon Point – is on the market through Savills for about €86 million. It is virtually 100 per cent occupied and produces a rent roll of €5.54 million from tenants including Penneys, Eason, Boots and Specsavers.

The sale includes a site where there is conditional planning permission for a new 7,000sq m (75,347sq ft) shop, a 190-bed hotel, cinema, offices and car park. Wilton was bought in April 2016 from Nama by US-based fund York Capital and Paddy McKillen’s Clarendon Properties in a deal which valued Wilton at about €70 million.

Meanwhile, Waterstones bookshop on Patrick Street was sold recently for about €6.525 million – slightly over its guide price of €6.25 million – to show a net initial return of 10.88 per cent. It produces rent of €770,000 with five years left on the lease and has a floor area of 1,050sq m (11,367sq ft).

Cushman & Wakefield puts prime high-street rents in Cork at €2,350 per square metre (€218.32 per square foot) and prime yields at 5.5 per cent “with little deviation in rents or yields anticipated over the short term”.

All eyes, however, will be on the outcome of the Wilton sale, as it should indicate the underlying value of retail assets and the demand for retail space. It’s worth pointing out, however, that bricks-and-mortar retail assets are far from flavour of the month with the investment community, given growth in online sales. Green Reit, for example, recently announced it had sold out of the retail sector in favour of logistics. Some 20 per cent of its portfolio once contained retail holdings but chairman Stephen Vernon said the company was “out” of the sector as “retail is challenged across the world, particularly malls, as they need a lot of ongoing investment”.


In terms of Cork’s industrial market, there has been a sharp drop in the vacancy rate over the past five years, driven, in part, by growing demand for logistics space. This reflects a growing international trend as booming online shopping is spurring demand for deliveries and, as a result, warehouse space. Investors were quick to recognise this trend in the Dublin market and those who jumped first, and early, have been handsomely rewarded, as capital and rental growth have returned to the market.

According to Lisney, Cork industrial take-up reached 16,900sq m (181,910sq ft) in the second quarter of 2018 – higher than the first quarter of the year and more than the comparable quarter in 2017. Thirteen deals were completed in Q2 2018 – up from seven in Q1 – while the average transaction size increased to 1,850sq m (19,913sq ft), boosted by the sale of a vacant 7,000sq m (75,347sq ft) warehouse on Monahan Road.

Cushman & Wakefield suggests Cork’s industrial market this year experienced “the strongest opening half-year since 2015”, while available space stands at 122,200sq m (1.315 million sq ft) – “a decline of almost 53 per cent from its peak in 2013”. The agency points to above average take-up over a number of years “combined with some units being removed from the market” as significant factors in this decline.

It puts the industrial vacancy rate at 9.4 per cent, while Lisney suggests 13.4 per cent. A large proportion of the available space, however, is older stock with lower eaves heights and no dock-level loading doors. Much of this may be obsolete and not up to modern standards. As a result, there’s more competition for Grade A space.

Notably, express delivery specialist GLS pre-let 1,850sq m (19,913sq ft) in part of a large new warehouse under construction in Blarney Business Park. “This was the first pre-let of an industrial building in Cork in this property cycle,” says Aoife Brennan. “However, there is no new speculative development on site with current rental and capital values remaining below the level required to make new development projects viable.”

However, CBRE claims about 5,000sq m (53,819sq ft) of industrial space is under construction “in the environs of the city at present” but supply “remains tight”.

New industrial schemes are in the pipeline. A 6,000sq m (64,583sq ft) warehouse in Little Island for EZ Living recently secured planning permission. In addition, planners also gave the green light to a 30,000sq m (322,917sq ft) data centre at the former Mitsui Denman site in Little Island.

Prime industrial rents are stable at about €70 per square metre (€6.50 per square foot) in the city but, in the north suburbs, rents are rising to about €59 per square metre (€5.50 per square foot). Capital values for prime industrial are steady at €753 per square metre (€70 per square foot) with the north suburbs coming in at €538 per square metre (€50 per square foot).

As in Dublin, the purpose-built student accommodation sector is starting to gather momentum in Cork with up to 750 bed spaces due to be delivered this year. An older student block on Copley Street in Cork city centre, for example, is to be enlarged by Hatch Student Living in a €25 million investment which will double bed numbers to more than 250 and include a gym, laundry and communal lounges. Across Cork, Galway, Limerick and Kildare, there are estimated to be about 2,900 bed spaces with a grant of planning permission while another 1,950 in bed spaces are at the preplanning stage.