PRIME RENTS FOR SHOPS ON HENRY STREET HAVE INCREASED 14% ON THE PAST YEAR

During the last six month period, the Irish retail sector has continued to show signs of improvement and this improvement is now becoming increasingly evident in many locations around the country as well as Dublin.

This is according to commercial property specialists, CBRE, who yesterday released their latest research report, focussing on trends in the retail sector of the Irish economy and property market.

Occupier demand and retailer activity has been getting consistently stronger in prime retail locations across Ireland over the last six months according to the report.

This trend first materialised in Dublin but during the last year has become evident in other prime high streets and shopping centres around the country. Occupier demand is coming from both indigenous occupiers and new entrants to the market although CBRE admit that the number of retailers looking to expand in provincial locations is not as diverse as those focussing on securing stores in Dublin.

According to CBRE, Dublin now ranks as the 78th most global city in the world (in terms of retailer presence) while Belfast ranks 116th in the world, with both cities having improved their ranking year-on-year.

CBRE claim the the biggest challenge facing many retailers is a lack of availability of retail units on prime high streets, shopping centres and retail schemes throughout the country. In turn, this has led to further increases in prime retail rents in key locations over recent months.

According to CBRE, prime Zone A rents on Dublin’s Grafton Street (which first began to increase in 2015) have increased by 4% year-on-year to currently stand at €5,700 per square metre per annum, while on Dublin’s Henry Street prime zone A rents increased for the first time since 2013 in Q1 2016, to stand at €4,000 per square metre per annum — an annual increase of some 14.3%.

Furthermore, there has also been upward pressure on rental values in prime shopping centres across the country in the last six months with prime Zone A rents typically ranging between €1,500 and €3,000 per square metre per annum on average.

Meanwhile, Zone A rents in Dundrum Town Centre currently stand at approximately €4,000 per square metre per annum according to CBRE. Prime retail warehouse rents remain stable at approximately €296 per square metre per annum and between €100 and €135 per square metre per annum for provincial and secondary locations.

In contrast, there are still some regional high streets that continue to struggle with high vacancy rates. In the first quarter 2016, Athlone in the Midlands had the highest vacancy rate of the ten locations surveyed, having experienced an increase of 4.6% in ground floor vacancy since third quarter 2015 to stand at 18.2% at the end of the first quarter.

Cork also experienced an increase in vacancy levels over the last six months from 6.6% in third quarter 2015 to 9.5% in Q1 2016 — albeit occupancy on this street has improved compared to this time last year.

CBRE say that prime high street yields in Dublin are now in the order of 3.25%.

Senior Director in the Retail Agency department at CBRE Ireland, Bernadine Hogan said, “There has been a lot of activity on many of the country’s high streets since our last high street vacancy audit was conducted in Q3 2015. In some locations, units have been amalgamated to create larger premises for potential occupiers.”

He added, “In other locations, a number of tenants have relocated to alternative premises on particular streets while there is clear evidence of efforts on behalf of some authorities and town councils to improve the retail landscape on streets in an effort to tackle vacancy and dereliction.”

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