Cork commercial deals slow but looking healthy according to Lisney

The Cork commercial market is coming off something of a purple patch but, according to Lisney’s third quarter update, it may be starting to take a breather.

Cork commercial deals slow but looking healthy according to Lisney

Q3 recorded lower levels of uptake compared to Q2 2015 and Q3 2014.

However, the volume of deals closing increased over the quarter.

The largest deal of the period was the 650 sq m expansion by ESB International on Eastgate Avenue.

The quarter also saw further announcements of pre-lets in One Albert Quay beside City Hall, with around 80% of the available space now reportedly pre-let.

Although transaction levels have reduced, Lisney considers them to still be quite strong with a total of 3,550 sq m taken up in the three-month period.

The average size of deals concluded over the quarter was 350 sq m, the largest being ESB’sexpansion on the first floor of 6 Eastgate Avenue, in Little Island; it already occupies a section of the ground floor in the building.

In the west suburbs a total of 400sq m was taken by software company VCE in Ballincollig. In the city centre a further 350 sq m was taken up on in South Mall by FRS.

Foreign direct investment demand in the office market in the first half of the year was strong but cooled over the summer. Demand continues to be focused on higher quality, with 71% of take-up being Grade A stock.

Grade B and C stock, on the other hand, accounted for just 10% and 19% respectively.

Remarkably, lettings accounted for over 90% of all transactions, say Lisney.

The city centre was the preferred location in the three month period, accounting for almost 40% of accommodation transacted.

Grade A city centre rents remain unchanged, ranging from €250 to €280 psm.

In the suburbs rents stood between €120 and €160 psm.

In addition, rents along South Mall are at similar levels to modern space in the suburbs at €110 to €160 psm depending on size In accordance with recent trends, lease lengths continue to average 10 years, normally with a break option at year five.

There is also still some incentivisation such as free rent periods and landlord contribution toward tenant fit-out, but not in all cases.

Supply edged upwards at the end of September to 97,000 sq m, following a decline in the previous quarter.

The upward pressure is due to an increase in the release of second hand stock to the market leaving the overall Cork vacancy rate now at 19.8%.

Vacancy is lowest in the south suburbs at 13%. The city centre accounts for 28% of available stock but much of it is unsuitable for potential occupiers.

The 15,400 sq m at One Albert Quay, due to complete early 2016, is the only scheme currently under construction, although others are in the preparation stage.

Outlook for 2016 is for One Albert Quay to become fully let, Lapps Quay to experience further activity and refurbishment of older buildings in the city centre to continue due to limited availability of quality stock.

DETAILS: Lisney 021- 4275079

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