Bumpy ride for Cork commercial property market in 2023 with more challenges ahead

Aoife Brennan reports on trends in the Cork commercial property market, including the rise in office ‘grey’ space, positive retail indicators, and the prospects for 2024

Dunne deals: Irish retail giant Dunnes started its days on Cork’s St Patrick’s Street in 1944 and will celebrate its 80th anniversary in March. Ben Dunne Jnr, son of founder Ben Dunne, died in 2023. He trained in retail in Roches Stores.

ENTERING 2024, interest rates in the EU and US remain at 22-year highs and while the likelihood of further increases is now more limited, the prevailing elevated rates will mean a subdued investment property market for most of this year. The Irish, and indeed global, market in 2023 suffered from falling values, limited activity, and negative sentiment with prime yields softening by between 50 and 150 basis point (bps). This led to buyer inertia, which was compounded by the mismatched pricing expectations of vendors and purchasers. Nationwide, market turnover was at about one-third of the annual average of the past five years, and it was at the lowest level in 10 years. In Cork, the market did slightly better, with turnover at half the previous five-year annual average, and ahead of three of the last 10 years.

While 2024 will be another challenging year, there is evidence of more appropriate pricing emerging. If vendors are realistic on price, then there will be buyers. Smaller-scale private investors will be active, taking advantage of more favourable yield profiles. In terms of larger, more conservative longer-term investors, many have signalled that they intend on being back in the market in the latter half of the year, barring no more major external shocks. However it may take several months for them to move from looking at opportunities to agreeing deals, and any noteworthy uptick in market turnover may only emerge in 2025.