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Cork market showing shows strong activity


Aldi has taken space on the ground floor od the Elysian Tower in Cork City

Aldi has taken space on the ground floor od the Elysian Tower in Cork City

Aldi has taken space on the ground floor od the Elysian Tower in Cork City

More than €150m worth of retail property was sold in Cork City last year, just one of a number of signs that recovery is underway in the rebel city's retail market. Those sales also set the scene for the expected launch for sale within the next few weeks of Wilton Shopping Centre in the south western suburbs. There has been speculation that it may fetch €75m.

In addition four major retail developments are in the pipeline and three of these are expected to strengthen the footfall in the city centre as they practically book-end Patrick St, the city's high street.

One of these projects is the reconfiguration of Merchant's Quay shopping centre which is owned by Friends First and Aviva. "This phased project will enable the centre to offer a smaller number of larger stores as required by international fashion retailers, and ranging in size up to 18,000 sq ft.," explains Leigh Hegarty of letting agents Savills.

Meanwhile on the western edge of Patrick St, John Cleary Developments is shortly expected to submit a new planning application for a 0.65 acre site including the former Capitol Cinema, and the site can offer another route from Patrick St to the Grand Parade.

Less ambitious than previous plans for a €200m development with 100,000sq ft of retail, the Cleary plans are also expected to include offices. There has also been speculation that the project may accommodate an extension to The English Market, whose artisan food stalls were the talking point of Queen Elizabeth's visit to the city. Cleary's project will be within a five minute walk from Beamish Brewery where a new event centre is about to be developed by Dutch duo Heineken and BAM.

About half way between the Merchant's Quay and Grand Parade, Primark, the owner of the Penneys clothing chain has acquired a number of neighbouring premises which could lead to an interesting retail development connecting three prime shopping streets, Patrick St, Cook St and Oliver Plunket St.

Meanwhile in the suburbs, international investor Varde is believed to be considering how to expand The Douglas Court shopping centre in the south suburbs which it bought last year as part of the €160m Spectrum portfolio of six national shopping centres and an office block.

Anchored by Dunnes Stores, Douglas Court accommodates over 50 retail and kiosk units and has a 95pc occupancy in 167,748 sq ft of retailing space. One of the attractions highlighted by the sales agents Savills was that its 13.6 acre site, which has surface parking for 950 cars, also has potential for a further 80,700 sq ft of commercial space.

Varde, whose letting agents are HWBC, also bought the Blackpool Shopping Centre and Blackpool Retail Park as part of the €171m Acorn Portfolio last year. Located on the northern approach road to the city, Blackpool's retail accommodation is practically fully let.

Prior to the sale of the schemes, Douglas was generating annual rental income of €3.9 million while the Blackpool properties were generating €8.1m.

Margaret Kelleher of Lisney says that prime retail city centre yields have hardened with rates falling from 8pc to 7.25pc since the start of 2014. Notable sales included McDonalds at 4/5 Winthrop Street which sold for €4m and Tesco Express, Douglas Road which sold for €1.5m. In addition 106/107 Patrick St has gone sale agreed for €1.95m.

However the city centre has had some tough years as, buffeted by floods, the economic crash and upward only rent reviews, some retailers closed down. Consequently some landlords had to substantially cut rents in order to retain or entice retailers who would be willing to brave the economic conditions. In addition some offered other concessions such as short lease terms and turnover related rents.

But a turnaround in demand has been seen in the last nine months. By the beginning of this year vacancy levels had fallen from 16.5pc in 2013 to 12.5pc and are continuing their downward trend. Oliver Plunkett St vacancy is below 7pc.

While a number of Patrick St shops are still closed they will be opening soon after recent letting deals and fit outs which are underway. Increased demand has also led to new lease terms being extended to up to 10 years, turnover percentages have been practically eliminated and rents have begun to increase.

Ms Hegarty reckons that suburban retail rents have increased by between 5 and 10pc while prime city centre retail have risen by between 10 and 15pc. Ms Kelleher agrees and says rents range between €150 and €200 per sq ft Zone A.

On Patrick St new lettings include fashion chain SuperDry, which is taking the front section of the Moderne (stet) building. Savills had been quoting a rent of €450,000 for the entire four storey building. Holland and Barrett are taking 43/44 Patrick St where Wallis were located. Hairspray, the hair accessories chain, is to open on Patrick St with its first store outside Dublin.

A fashion jeweller is believed to have agreed to take the former Swamp store at 37 Patrick St. Starbucks are fitting out on Prince's St and are also believed to be considering another store in nearby O'Callaghan Properties' Opera Lane development where international shoe-sellers, Skechers, recently opened their third Cork store.

The combination of the €150m in retail investment deals and about €100m in office deals as well as about €50m in industrial deals bring to around brings to €300m, the level of property sales activity in Cork last year.

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