There is huge potential for regional cities, but appropriate capital spending is a must, writes Marie Hunt
ONE of the key trends noted in the Irish commercial property market in 2019 was the increased focus on regional locations, with appetite from investors and office occupiers alike for opportunities in cities such as Cork.
Although admittedly low relative to the volume of activity experienced in Dublin, which once again was boosted by significant tech-related activity during 2019, there was a welcome improvement in transactional activity in regional cities including Cork, Galway and Limerick during the last 12 months. In addition to good take-up volumes in the occupier markets (particularly offices) in regional cities, there was an increase year-on-year in investment activity in the regions during the year. There are several new schemes currently being developed in regional cities, which clearly augurs well for 2020.
The investment market in regional cities remains strong with many investors now looking to diversify out of the core Dublin market and looking for regional opportunities, hampered only by a shortage of sizeable opportunities. The regions will, for the first time in a long time, be able to boast new supply from 2020 onwards. This is significant on two fronts. It is important from an occupier perspective, as occupiers won’t commit to regional locations unless there is clear visibility on supply, which has been lacking for several years now. It is also significant from an investment viewpoint as new stock coming on stream in the office, residential, and hotel sectors in Ireland’s regional cities during 2020 will give rise to new investment opportunities once this stock is leased up in due course.
Regional cities clearly have huge potential, as recognised by the Government’s ambitious Ireland 2040 programme. Indeed, the Government’s aspiration is that 75% of the 1m extra people that will call Ireland home by 2040 will be accommodated outside of the Dublin market.
However, without appropriate capital spending, this wish will never materialise. To enable the regions to reach their full potential and reduce reliance on Dublin, the delivery of high-quality supporting infrastructure (transport, housing, broadband etc) needs to be urgently prioritised by Government. In this respect, the rollout of 5G technology in Ireland from this year onwards, which will enable download speeds of up to 100 times faster than at present, will be hugely significant in terms of supporting more balanced regional development.
In order for Cork, and more specifically the docklands region of the city, to reach its full potential, transport infrastructure provision is vital with investment needed in roads and bridges in particular. We therefore urge the public and the private sector and all stakeholders to work together to ensure that projects such as the long-promised Dunkettle interchange and the M28 project are prioritised and fast- tracked during 2020. We also clearly need to see the delivery of apartments to support the volume of office construction that is under way and planned for the Cork City and urge Government to assist with unlocking viability to enable this to happen.
As we finish what has been a tumultuous decade both for the Irish economy and the property real estate sector, the prospects for Ireland’s regional cities have probably never been better. There is a realisation at government level that Ireland’s regional cities have huge untapped potential, and from an affordability and quality of life perspective, more people (aided by improvements in technology) are opting to ‘live, work and play’ in cities other than Dublin. If the Government is serious about balanced regional development and commit to infrastructure provision, the next decade could bring radical changes for Ireland’s regions.
Balanced regional development and reduced reliance on Dublin won’t happen without joined-up thinking and effort on everyone’s part, however. We need to get better at collating data and information about our regional cities and using marketing collateral to ‘sell’ Ireland and our cities and regions to encourage occupiers and investors to consider options other than or in addition to Dublin.
Reports produced by CBRE Ireland during 2019 on “The Case for Cork” and “The Case for Galway” have been extremely well received, particularly amongst international occupiers and investors who heretofore probably couldn’t have identified these cities on a map.
We also need to ensure that there is dialogue between employers and third-level education providers in the regions so that we can deliver a ready supply of talent with the right set of skills and education to match what employers are specifically looking for.
Marie Hunt is executive director head of research, CBRE Ireland