Delivery of new office stock in Cork city looks set to calm recent rent growth, with current peaks now standing at €350 per square metre or €32.50 per square foot, according to a new specialist sector report.
And, the same Lisney agents’ research also reports strong rent recovery on the city’s South Mall, even among much older office stock, once it is refurbished and upgraded.
Notably, a few very specific rent deals on the Mall showed searing growth, by as much as 41% in a year and by 20% in 2019’s Q2, going from €183 psm (€17 psf) to €258 psm (€24 psf).
In one instance, the South Mall scored the headline rent of €350 psm/ at the recently completed JCD Group’s Grade A development 85 South Mall.
“South Mall rents have grown substantially in recent quarters, mainly due to new activity on the street and greater levels of refurbishment and upgrading of older buildings,” says the Lisney Q2 Cork Office market commentary, which described Q2 as “a relatively good quarter with take-up at the third largest quarterly level recorded in the last five years.”
However, three of the four-only transactions were lettings, and the main sale deal was that of a new-build at Eastgate to Eli Lilly, in a presale with O’Flynn Construction that was agreed in Q4 2017: that deal for a 6,100 sq m build accounted for 78% of Q2 activity.
There were two deals in the city centre, both on South Mall with mobile phone case producer Otterbox taking two floors and 1,080sq m 80A South Mall, an older era building, interestingly moving from a more modern suite on Georges Quay, and doing an elaborate upgrade on arrival at 80A.
While not part of the take-up figures, Lisney also note that having moved to JCD’s 85 South Mall, Forcepoint have sub-let approximately 830 sq m of space at the previously-developed JCD block at One Albert Quay to security software company Varonis.
With 66,200 sq m of offices in four sites under active construction (offices have now commenced at the BAM/Clarendon HQ site by Kent Station alongside the Dean Hotel) Lisney says with “the greater supply of new city centre office schemes nearing completion and demanding higher rents, city centre rates are expected to stabilise in the short to medium-term.”
The overall Cork office vacancy rate stood at 9.5% at the end of June.