Poor take up of Cork office space

THERE was a poor level of office space take up in Cork in the second quarter, according to a new report from DTZ Sherry FitzGerald, with a notable increase in supply of offices, mostly from the release of second-hand properties, along with the rapidly completing City Gate Park in the Mahon suburbs where Quest are set to take 80,000 sq ft of the 250,000 new building.

Office vacancy in Cork now stands at 22.6%, three times the ‘equilibrium rate’ of 7%.

Cork’s slack office performance of just 10,650 sq m transacted in the 12-month period to end of June contrasts with figures for Limerick and Galway, yet those cities were also below long run averages.

But, commercial agents in Cork say there have been other deals inching through, as well as several on-going advanced inquires which should see take-up improve by year’s end.

Locations under active scrutiny include City Gate Park, and the Airport Business Park, where Hittite Microwave Corporation have quietly taken on about 10,000 sq ft.

Also in the anticipated pipeline are further Apple jobs and moves, likely to take further space at Half Moon Street by year’s end after developer Owen O’Callaghan sough permission for change of use from retail to offices for the building above Boots. Apple last summer took c 25,000 sq ft at Half Moon Street for up to 350 employees, and more recently applied for planning for significant extension of its Hollyhill site on the city’s northside. Several other mid-sized deals are said to be pending at City Gate Park.

Across the city, Amazon is also looking to expand its presence at the Airport Business Park, according to sources.

Meanwhile, DTZ’s Q2 update reports just 2,000 sq m transacted, down from an already low 2,700 sq m in Q1, and there was a 26% reduction in annual space transacted from the higher 2011 figure. Small-sized deals remain the dominant occupier preference.

The total quantity of space transacted in the 12 months to quarter two stood at 10,650 sq m. A comparison with the same period in 2011 reveals a reduction of 26%. Furthermore, this level of transaction activity remains significantly lower than the long-term annual average.

An analysis of the profile of space taken up during the year to Q2 reveals that smaller-sized deals remain the dominant occupier preference and “on a positive note, the number of individual deals transacted during the quarter rose again. Furthermore there has been an evident increase in the amount of space reserved in the three months to June. This should positively impact take up in the forthcoming quarters,” DTZ comment. Their Cork office market analysis shows that 56% of all transactions in the past year occurred in the city centre.

The suburbs continued to account for the majority of available accommodation in the region, standing at 68%. The remaining 32% was accounted for in the city centre.

Available accommodation is now back at Q3 2010 levels, with 128,550 sq m available out of total stock of 510, 650 sq m.

According to DTZ, the rate of release of second-hand space began to accelerate in 2011 “and it has yet to show any signs of easing. In addition, weaker levels of demand during the quarter also contributed to the increase in supply.”

Details: DTZ 021-4275454