French investment fund pays €5m for South Mall office block
French investors paid almost €5m for 26/27 South Mall in Cork city
A French investment fund paid almost €5m for a South Mall office block in what was the second biggest commercial property deal in Cork in H2 of 2024.
Mata Capital IM, fund manager for private investment vehicle Osmo Energie, spent €4.9m on Nos 26/27 South Mall, in its first acquisition outside of France.
French investors have been active in the city in recent years: Corum Asset Management bought Mahon Point Retail Park for €50m in Q1 2024. It already owns Block A (NSQ1) of O’Callaghan-Properties-developed Navigation Square, which it bought for an estimated €60m in 2021.
Lisney, in its commercial property market update for Cork H2 2024, said there was “likely to be greater activity from international capital, particularly French investors”.
“They will be sector agnostic and instead will be focused on yield target and length of guaranteed income,” the report said.
The South Mall office block which Osmo Energie/Mata Capital bought was renovated in 2018/2019 after it was sold to Dublin/UK investors for c €2.2m.
Following the upgrade, South Mall law firm JW O’Donovan Solicitors relocated there from No 53 South Mall.
The deal to sell the office block was done off market in Q4 of 2024. The building was producing an annual rent of €385,078pa across four tenancies, with JWOD on the ground and first floor. Other tenants include Crowley McCarthy Accountant and OCMA Architects.
The single biggest transaction in H2 2024 was the sale of Blackpool Shopping Centre for €48m to Pan-European real estate fund manager Patron Capital, in partnership with Ireland-based Lugus Capital.
The Lisney update shows the two Cork deals accounted for just 3% of the national investment market turnover in H2 2024, which reached €1.78bn across 60 transactions.
Lisney said while there was a “limited number of on-market investment opportunities” in Cork at the end of 2024, the supply is “likely to be healthier given the continued activity occurring off-market”. The report estimates that prime office and retail yields in Cork “remained stable at 7.25%”.
Lisney said it expected turnover in the Cork market to grow in 2025.
The report notes a decline in take-up in the Cork office market. Total take-up in 2024 reached 25,000 sq m across 52 transactions, compared to 29,300 in 2023. Lisney said demand for office space “remained limited in 2024” but that enquiries for city centre accommodation were picking up in Q2 of 2024.
The report said sustainability and ESG (environmental, sustainability and governance) “remains a consideration for tenants seeking office accommodation and owners of older office buildings will need to consider strategies to improve the energy efficiency and building ratings of their properties”. Prime city centre headline rents increased to €350 psm (€32.50 psf) from €325 psm (€30 psf) in H2 2024, having fallen at the beginning of 2023 for the first time since the end of 2020. At the end of December 2024, prime headline rates in the suburbs remained stable at €230 psm (€21 psf) as did the rents on South Mall, which remained at €225 psm (€21 psf). Nearly half of all vacant office stock was in the city centre (48%).
In terms of the construction pipeline, the report said 15 schemes had planning permission at the end of 2024 but had not commenced construction. It said no new office developments are expected to commence in 2025.
“It is likely that developers will focus more on residential” Lisney said adding it was “very unlikely” that any new schemes would progress “unless pre-lets are secured”.
The outlook for the industrial sector is that challenges to meet demand will continue, due to low vacancy rates and supply constraints in Cork, with rent increases “likely to continue to justify new developments” .The largest industrial lettings in H2 2024 included two newly units in Anchor Business Park, Little Island, each let to Munters, a Swedish company, on individual leases.
The report said current requirements for industrial premises “are mainly for units close to the main road networks particularly on the south and west sides of the city”.
Prime rent for high bay accommodation “increased to a new record level of €1,145 psm (€13.50 psf) in H2 2024, up from €123 psm (€11.40 psf) six months prior”.
Lisney said limited available stock and elevated construction costs “continue to put rental values under upward pressure”.
In terms of retail, Lisney said there were good levels of retailer occupancy on prime high streets and in key shopping centres and retail parks and that retail parks “have attracted significant investor interest in recent times”. It said the vacancy rate on Patrick Street was 17% at the end of 2024 and 9% on Oliver Plunkett Street — a reduction from 20% and 10% respectively in December 20
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