Paul McNeive: 'Cork forges ahead but faces national development issues'
The right moves
I was in Cork last week and took the opportunity to have a good look around, and meet some old contacts. It's interesting to note that the city is following the recovery pattern seen in Dublin, but with one or two twists - notably Cork is a beneficiary of the high accommodation and staff costs seen in Dublin.
Peter O'Flynn, managing director of Cushman & Wakefield, told me that Cork is seeing a number of professional firms doubling and trebling in size, as they can handle more international work from the location, have lower occupational costs than in Dublin and find it easier to recruit staff. For example, KPMG has trebled in size and has taken a lease of 2,800 sq m (30,139 sq ft) in John Cleary's new office building at 85 South Mall. Forcepoint has pre-let the remainder of the scheme, which will be completed by year end. Headline rents are €300 to €320 per sq m.
Clearstream is doubling in size and has pre-let up to 9,000 sq m (96,875 sq ft) at O'Callaghan Properties' Navigation Square scheme, at a headline rent of €325 per sq m. These are large deals in any location but to have pre-lettings of this scale in Cork is a sure sign of a booming market.
Other large office schemes under construction include the 25,000 sq m (269,097 sq ft) Penrose Dock scheme, also by John Cleary, and the Bam/Clarendon Properties' joint development on the CIE site at Horgan's Quay, which is approximately 38,500 sq m (414,410 sq ft), including a hotel and residential units.
Given the expansion of employment, one would have expected that city-centre apartment development would be viable again, but both O'Flynn, and Peter O'Meara, director at Savills, agree that this is not yet the case.
Indeed, O'Meara was strong in his views that the National Planning Framework (NPF) guidelines, which are seeing planners pushing for apartment-type densities on suburban sites, are preventing development there. As he eloquently puts it: "If apartments aren't viable in the city, how can they be viable in the suburbs?" Conversely, he tells me that there are perhaps 30 residential schemes under construction around Cork, ranging from small projects, up to Cork's largest project, the 200-house scheme at Heathfield, Ballincollig. All of these are detached and semi-detached houses which O'Meara tells me will sell well.
Both agents agree that the investment market is strong with prime offices making between 5pc and 5.5pc, and industrial approximately 6pc. Prime industrial rents are €80-€85 per sq m.
At Cork Chamber of Commerce, Sarah Thatt-Foley, public affairs executive, told me that confidence among the Chamber's 1,200 members is high, and rose to record levels in their latest survey. The controversy over the new traffic arrangements in the main shopping street, St Patrick's Street, is abating and the current scheme, which gives priority to buses and taxis between 3pm and 6.30pm is regarded as a success.
"It has increased footfall in the city centre," she told me "and improved the reliability of buses, which is good news for shoppers, and staff."
Thatt-Foley expects that an upcoming environmental survey will show improved air quality in the city centre. I was certainly impressed by the litter-free appearance of St Patrick's Street on my visit.
KPMG Irish Independent Property Excellence Awards 2018
I'm looking forward to co-hosting the Property Awards tonight at the Convention Centre Dublin. The event is firmly established as the premier occasion for recognising and promoting excellence in the property industry. This year's event is bigger and better than ever, with more entries, more award categories, and an audience of over 1,000 people attending. The already-high standard of entries has improved yet again, perhaps reflecting stronger market conditions, and there is very strong competition in all of the categories.
I'm delighted that I will be joined as co-host, by my fellow Irish Independent columnist and finance expert, Sinead Ryan. And I'm excited about my opportunity to interview a very special guest.