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Owner occupiers dominate first quarter of Cork industrial activity

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Fillig up: The scheme at Penrose Dock now has over 65pc occupancy

Fillig up: The scheme at Penrose Dock now has over 65pc occupancy

Fillig up: The scheme at Penrose Dock now has over 65pc occupancy

Tight supply of industrial and logistics properties in Cork may lead to a reduction in yields from 6.25pc to 6pc this year, according to the latest forecasts from Cushman & Wakefield. Meanwhile, at the end of March, office rents and yields held last year's levels at €355 per square metre and 5.25pc respectively.

However, managing director in Cork Peter O'Flynn says the forecasts may be revised in the current quarter. Furthermore, rival agency CBRE says Cork's prime high street rents and yields are tending weaker and estimated Zone A at €1,935 per sq m at the end of April and yields for these properties at 7pc.

Mr O'Flynn says Cork's industrial market recorded a strong start to 2020 with 21,150 sq m of industrial space taken in 13 deals, "making it the strongest opening quarter on record". In contrast to historical trends, owner occupiers dominated the first quarter with 73pc of activity.

Consequently, availability had fallen to 65,400 sq m at the end of March - its lowest level in over a decade - and the vacancy rate dropped to 5pc.

"The longer term trend remains positive with upward momentum on rents and capital values in due course. Investor interest remains positive for good quality product, but opportunities remain few and far between due to lack of new product," Mr O'Flynn said.

He puts rents at €90 per sq m, while CBRE says they are €91.50 for prime industrials.

In the city centre, 38 500 sq m of offices were under construction across the Penrose Dock, Horgan's Quay and Counting House developments in March and are due for completion this year.

While Covid-19 has dampened expectations somewhat for offices, his colleague Sean Haley said: "There has been little evidence of transactions that are in the pipeline being cancelled which is positive."

One of the county's most active developers, JCD Group, has let 4,645 sq m of offices to Qualcomm and 835 sq m to Sophos at Penrose Dock bringing the scheme to over 65pc occupancy.

Brian Edwards of CBRE reports three investment transactions with a total spend of €25.3m between them in the first quarter. They include Corum's purchase of an Aldi store in Carrigtwohill for €5.6m equating to a net initial yield of 7.34pc.

Irish Independent