DTZ sees dual-market scenario in Cork office sector

A dual market scenario is emerging in Cork’s offices sector, according to a just-released report by agents DTZ.

They note the key importance of the Foreign Direct Investment (FDI) sector in the city and region as main players, with space needs from the indigenous sector still very faint.

“There’s weak office demand from the local economy, particularly for small units,” they observe, admitting the FDI occupier is predominant.

In contrast, Dublin -- which is Cork’s main and strongest competitor for occupier -- “is operating with demand levels across a wider spectrum of demand, both FDI and local market demand.”

As excavation work progresses on the One Albert Quay site via John Cleary and BAM, aimed at Tyco and PWC among other tenants, DTZ said the Cork market was improving and was “likely to witness further new office construction, in large scheme/floorplates, both in prominent city centre sites and nodal suburban locations, with main target occupiers being FDI in character”.

“However, equilibrium for the market, will not be achieved, until local indigenous demand increases to address the existing high vacancy rates for smaller units. In any event, in some locations, ‘office’ buildings may convert to residential higher value uses. There is merit in this trend – particularly if it seeks to address the scarcity of rented residential accommodation,” comment Frank Ryan and Philip Hosford of DTZ Sherry FitzGerald Cork.

Due to lack of large floor plates in the city, some 76% of office space taken up in Cork in 2014 was suburban/out-of-town, such as the Eli Lilly back-offices move to a €10m building at East Gate Business Park.

Supply levels continued on a downward trend, dropping by 1.5% in the autumn quarter to stand at just over 100,000 sq m. and that figures is down 19% on the same period in 2013. Vacancy rate for the Cork office market stood at 18.4% at the end of September, down from 23.2% in late 2012.

* Details: DTZ 021-4275454