The Cinderella of the Irish property market, the industrial sector, is shining bright in the midst of the Covid-19 downturn afflicting the Irish and global economies.
The unglamorous industrial market — think sheds, big and small — is outperforming the prettier and sexier siblings, such as retail, investment, and offices.
In Cork, for example, the vacancy rate for industrial accommodation has dropped to a new, record low of 3.6%, after a strong Q2 this year, and where a letting deal at the Ringport Business Park, in Ringaskiddy, sees the sizeable park of over 230,000sq ft (that’s about six acres of buildings) reach full occupancy.
Spotting that the market’s sectoral Cinderella is, indeed, having a ball, is Lisney estate agent Edward Hanafin, who’s just compiled a Q2 analysis of activity levels in Cork’s investment, construction, retail, and offices.
Investment deals, he said, were “subdued”, office transactions were “at very low levels”, while impacts on rents across most sectors hadn’t enough transaction to gauge rises or falls.
In fact, Cork’s office market saw a
minute transaction in Q2, a sale of just 125sq m (about the size of a three-bed semi-D) at Anglesea St, and that was against a typical quarterly average of 5,000sq m, and a typical quarter average of seven transactions.
According to Mr Hanafin, six industrial deals occurred in 2020’s Q2, during peak Covid-19 lockdown, and “the industrial market has been the least affected property sector by Covid-19”.
In spite of the pandemic, approximately 8,300sq m of space was taken up in Q2, well ahead of the previous three months (820sq m) and in line with the long-term quarterly average of 8,750sq m.
There were two sales, at University Hall Industrial Estate and at the Euro Business Park, while the largest deal of the quarter was in Ringport Business Park, Ringaskiddy, where MSL Engineering took 6,250sq m, the last remaining available unit, and the 230,000sq ft Ringport Business Park “is now fully occupied”.
On the investment front nationwide, investment market turnover was
€430m in the three months, bringing
the total for the first half of 2020 to €1.1bn.
By the end of June, there was approximately €800m of investment stock on the market nationwide, 45% of which was either agreed or in negotiation. This leaves just €435m available.
And, of the €800m, just over €100m is accounted for by Cork properties. “However, much of this relates to Wilton Shopping Centre, which remains on the market for sale”, says the Lisney Q2 report, which reports “investment yields remained relatively steady, but with retail an exception where yields have softened. The gap between prime and secondary yields is likely to widen in the coming months, as investors will focus on well-located buildings let to AAA covenants that will act as defensive investments.”
On offices rents, Lisney say that “given the lack of transactional evidence and the fact it is too early to assess how the pandemic is impacting rents, prime, headline, city centre office rents for top-quality accommodation remained steady in Q2, at €350psm.
“Rental increases are driven by companies expanding or entering the market. Consequently, rental rates in the next 12 to 24 months are dependent on market demand.
“It is likely that FDI companies will adopt a wait-and-see approach in terms of assessing their occupier requirements,” Lisney say.
The report comes as the IDA, yesterday, warned that foreign direct investment could drop by 40% in the rest of 2020 and 2021.
- DETAILS: Lisney 021-4275079