Re­tail rents sta­ble as shop­pers look for value

Rent down by 38% be­low last peak, as rise in sales vol­ume out­paces sales value Prime rents on Grafton Street had set­tled at €6,500 per sq m in Septem­ber

The Irish Times - Business - - BUSINESS COMMERCIAL PROPERTY - JUSTIN COMISKEY Grafton Street By the num­bers

Rents on Dublin’s prime re­tail streets have sta­bilised over the past nine months as per­sis­tent value-driven be­hav­iour by Ir­ish shop­pers is pre­sent­ing chal­lenges for re­tail­ers.

This is the stand­out find­ing from a new anal­y­sis of the sec­tor from agent Cush­man & Wake­field. It says prime rents on Grafton Street had set­tled at €6,500 per sq m in Septem­ber (38 per cent be­low their pre­vi­ous peak) while those on Henry Street stand at €4,683 per sq m (more than 33 per cent off their 2008 peak). Only mod­er­ate rental up­lifts are pre­dicted on the city’s top thor­ough­fares in 2018.

When com­pared with other Euro­pean cities, rents on Grafton Street are just 3 per cent lower than Frank­furt yet are 8-18 per cent above Barcelona and Am­s­ter­dam. But Grafton Street’s rents are “con­sid­er­ably be­low the prime streets of Lon­don, Mi­lan and Paris, where cur­rent av­er­age shop rents stand two and three­fold higher”, ac­cord­ing to Cush­man & Wake­field.


The re­port says there are just four va­cant shops on Grafton Street, which re­flects an oc­cu­pancy rate of 93 per cent. On Henry Street there are just two shops avail­able to let.

“High oc­cu­pancy rates in Dublin’s prime high streets have lim­ited re­tail­ers’ op­tions,” ac­cord­ing to the re­port. “How­ever, with a num­ber of po­ten­tial

Rents on Grafton Street are 8-18% above Barcelona and Am­s­ter­dam The oc­cu­pancy rate of Grafton Street, where there are four va­cant shops Foot­fall dropped at an an­nual rate of 1.6 per cent to Au­gust on Grafton Street

de­vel­op­ment schemes now in the plan­ning process, the sur­rounds of Grafton Street and Henry Street have the po­ten­tial over the com­ing years to pro­vide high-qual­ity, large floor plates to oc­cu­piers.

The ad­di­tion of schemes on Nas­sau Street, Daw­son Street, and Dame Street will also see the core re­tail district ex­pand, ben­e­fit­ing both re­tail­ers and con­sumers.”

De­spite near full oc­cu­pancy, Dublin’s prime trad­ing streets are ex­pe­ri­enc­ing a de­cline in foot­fall, which dropped at an an­nual rate of 1.6 per cent to Au­gust on Grafton Street. “Mar­ket ac­tors have sug­gested road­works and on­line sales are im­pact­ing city cen­tre trade,” ac­cord­ing to the re­port.

Sales volumes

An even greater chal­lenge for re­tail­ers on Dublin’s prime streets is that the rise in the value of sales is fail­ing to keep pace with growth in sales volumes – and the dif­fer­ence be­tween the two is grow­ing.

Cush­man & Wake­field re­ports that re­tail­ers point to a “per­sis­tent need for price dis­count­ing to drive volumes” even as sales volumes are ris­ing at a healthy an­nual clip of 7 per cent.

“Value-driven con­sumer be­hav­iour, which be­gan dur­ing the down­turn, con­tin­ues to be preva­lent in the mar­ket, lead­ing to rises in the vol­ume of sales out­strip­ping value growth,” ac­cord­ing to the re­port. It says this trend in re­tail sales data is “not vis­i­ble across the EU” where in­dices show “both the value and vol­ume of re­tail sales mov­ing in tan­dem, with sim­i­lar lev­els of growth recorded”.

The re­port says that the “con­tin­ued di­ver­gence” be­tween the value and vol­ume of re­tail sales growth has pre­sented an “el­e­ment of con­cern” among re­tail­ers. Low in­fla­tion fore­casts, ster­ling weak­ness and on­line shop­ping growth are adding to this con­cern.

“As re­tail­ers at­tempt to re­main com­pet­i­tive,” says the re­port, “there is no strong in­di­ca­tion that value growth will be­gin to out­pace vol­ume in the short term.”

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