Recovery is countrywide

All areas of the country are experiencing a property market uplift but the pace of the recovery is by no means uniform. According to Marian Finnegan, chief economist with Cushman & Wakefield, all three major urban centres outside of Dublin have seen growth since 2012, but at very different rates.

“In the office market, Galway started to recover at the same time as Dublin back in 2012 and expanded rapidly for a period after that but then stagnated as the available space started to dry up. The vacancy rate came down to single digits quite quickly. There are a few significant developments under way in the city and this will help activity, but they will only bring 10,000sq m of new space. Galway is a very attractive location and is very attractive to FDI and we are starting to see some supply coming through as a result.”

Cork has had a good couple of years. "It was slow to recovery but now that the vacancy rate has come down we are starting to see new space come on stream," says Finnegan. "Cork was traditionally a suburban market for offices but in the last 10 years we have seen a lot of major companies like Apple move back to the city."

Limerick did particularly badly after the crash but has started to pick up over the past few years. “They have a really progressive local authority there and Limerick is having a really good year,” Finnegan says. “It’s doing much better than Galway this year and we are starting to see the vacancy rate come down. Overall, the vacancy rate in Galway is about 8 per cent, it’s 10 per cent in Cork, and is still up near 20 per cent in Limerick but is falling.”

John O’Regan, who heads up the buildings and places team for Aecom in Ireland, says the picture is broadly similar for construction activity. The firm produces a review of the market each year and the data supports this view.

“Construction output across all regions is better this year than last year,” he says. “And last year was better than the year before, and that year was also better than the previous year. Output is increasing across all regions and sectors – the differentiation is in the pace of the growth. Dublin is absolutely flying ahead. Overall, we have seen growth of 20 per cent but it is in single digits outside Dublin.”

‘At the same pace’

At least the growth is there. “People give out that the recovery hasn’t reached the regions, but it has,” he argues. “It’s just not happening at the same pace. Part of the challenge facing the regions is the infrastructure deficit. Two examples of projects which could make a difference are the M20 Cork-Limerick motorway link and the Galway Outer Bypass. Both of these need to happen. There is an infrastructure plan and that’s good, it’s just that there is not enough in it.”

Despite this general return to health, the industrial property picture isn’t quite so bright. “It’s a similar story in all areas,” says Marian Finnegan. “The vacancy rate is in double digits in all regions and an awful lot of the vacant space is grade B or C which is totally unsuitable for FDI or other modern industry. There is a lot of tired old space and I would expect to see a lot of it redeveloped. I also see a trend in some of this space being developed for other uses like offices or retail. The new road networks around Cork and Galway will also open up new areas for industrial development.”

Finally, she describes retail as a mixed bag with quite low vacancy rates in the main urban centres but a different story outside of them. “When you get outside the key urban centres, retail is not doing as well. It is very dependent on the local economy and that is still struggling in many rural areas. We saw a lot of construction at the height of the Celtic tiger, but we are unlikely to see that again. There is room for new developments south-west of Cork city and outside Galway but not much beyond that. Perhaps we will see some new retail warehouse developments to support the growth of internet shopping.”