Cork an outlier as €67m in office deals dominate the Q2 investment market

Office sales made up 93% of the Q2 Cork investment market in contrast to the national market where residential investment made up 52% of the take and offices at 21%

Deal done: Block One at Cork city's Navigation Square, NSQ1. has been sold to French property investor Corum Asset Management for c€60 million. It was developed by O'Callaghan Properties and is anchored by finance-related IT firm Clearstream, part of Deutsche Borse Group

Spending in the Cork property investment market came to €67m for the second quarter of this year — just 4% of the national €1.5bn investment cake in the  quarter.

And, one major deal, where French fund Corum spent €60m to acquire offices at O’Callaghan Properties Navigation Square made up the bulk of Cork investment market for the year so far.

That, plus a sale by Oaktree of Block A at Cork Airport Business & Technology Park for €2.1m meant offices made up 93% of the Cork investment market in contrast to the national market where (residential investment made up 52% of the take, and offices 21%, with three Cork retail investments also record by estate agency Lisney in its Q2 2021 Cork report.

Prime office yields were steady at 6%, according to the report.

The trio of Cork city retail investments, reckoned to indicate an average 7.5% yield, were as follows:

• 78 St Patrick’s Street (let to Eir), sold by Irish Life to a domestic private investor for €1.19m/7.3% net initial yield (NIY);
• 66 St Patrick’s Street (trading as a Spar) sold for €970,000/NIY 8.0%;
• 10-13 Castle St, with 2, 3 & 7 Paradise Place, sold by Oaktree to a private investor for €1.23m/NIY 8.1%.

Also sold were a mixed-use building at 46 South Mall for €850,000, and an industrial unit at South Ring West Business Park at €660,000.

Office take-up in Cork was put at 6,400sq m, across ten deals, with Apple taking the majority of that, at Horgans Quay with 3,400sq m over three floors.

Despite prevailing wider market conditions, occupier demand improved in Q2, with several potential occupiers, including those from State agencies and the health and tech sectors having active requirements. Reports that fitness firm Peloton was seeking space for up to 700 workers, or 6,500 sq m, is a boost for Cork and they “are actively considering options”, says the Lisney report.

However, it adds that “until the majority of office workers are back in the office (likely to be the end of Q3 into Q4), many companies will delay making decisions on their office space needs”.

On retail, “there will be no quick fix solution in the absence of established overseas brands entering the Irish market. In the short term, unoccupied space will be taken on a short-term, pop-up basis until there is an increase in demand from retailers”.

Turnover rents are being discussed again, mainly driven by international and UK brands, but each store and tenant “must be considered on a case-by-case basis with matters including the handling of click-and-collect, instore online purchase, online purchase, instore returns, online returns, vouchers, staff discounts, reporting mechanism etc all needing to be agreed”.