Brand new to the Cork market this week is a prime office investment opportunity, for sale via agents Lisney, at 26/27 South Mall, writes Diarmaid Condon.
The street, which was traditionally the financial heartland of the city, had struggled for a long period after the most recent boom and bust cycle.
However, over the past number of years, it has rebounded strongly with occupancy increasing rapidly.
There are a number of new builds under way and planned for the future, giving a renewed sense of optimism to the area.
A number of office sale transactions have completed in recent times, including buildings at numbers 1, 50, 85/86 and 97. It has also been the final destination for several office relocations in recent months.
John Cleary Developments (JCD) has been behind much of the new development on the street. It is currently building 45,000sq ft of office space behind 85 South Mall. Office rents here are pitched at in excess of €30 psf for the high-end 50,000sq ft development.
JCD is also upgrading a 1970s office block at 89/90 South Mall and has undertaken refurbishment of a corner office at the Parliament St junction.
Improving prospects on the street have not gone unnoticed in the hotel industry. A new Maldron hotel close by is currently under construction and set to open by early 2019. Expansions are also continuing at the Imperial Hotel.
The subject property at 26/27 is being offered for sale on behalf of Friends First. It is described by David McCarthy of Lisney as an “asset management opportunity situated in an excellent office location in the heart of Cork City’s principal professional and commercial office thoroughfare”. Bank of Ireland’s regional headquarters is located nearby at number 32.
This is a purpose-built, seven-storey office building fronting South Mall with a net floor area of 1,543sq m (approx 16,615sq ft).
It currently produces a rental income of €103,000, but McCarthy claims that there is potential to substantially increase the existing rental income stream by securing tenants for three vacant floors.
The building is occupied by a variety of tenants on various full repairing and insuring (FRI) leases.
Current occupiers include Focus Ireland on the ground floor, the HSE, O’Mahony Pike Architects, and O’Connor Murphy Clune Solicitors.
The first, second and sixth floors are vacant, leaving 625.4sq m (about 6,730sq ft) of extra space to let. Rents for this type of older stock are typically €10 to €15 psf, but McCarthy says that if an owner was willing to upgrade the building, higher returns could be achieved.
McCarthy says: “Demand for high-quality modern office space remained strong in Cork throughout 2017, particularly among domestic occupiers seeking accommodation in the city centre. Rents continued on an upward trend, with prime city-centre rents growing by a substantial 15.4%.”
Having said that, he stresses that Cork rental levels remain very competitive when compared to Dublin, in particular. As a result, he feels it will continue to be very attractive to foreign direct investment (FDI) companies in 2018.
The property is part of the Friends First Irish Commercial Property Fund, which has over €500m worth of assets under management.
The property is being guided at €1.75m. Further information from Lisney at 021-4275079.
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