Feast or famine?
Published: 10 November, 2006
According to the Irish Retail Market View publication from CB Richard Ellis, the retail sector in Ireland continues to perform strongly, driven in the main by unique demographics, an ever-growing population and strong spending power, and fuelled, in recent months, by the maturing of SSIA accounts.
It also highlights the fact that retail sales in Ireland continue to outperform the UK and the rest of Europe and as a result, indigenous retailers continue to expand and enhance facilities throughout the country, while an ever-increasing number of overseas retailers continue to open and expand operations there.
According to the property consultants, when you consider the economic climate that has been experienced in Ireland in the past five years and the phenomenal population growth that has been witnessed in that period, it is not surprising that there has been significant retail development undertaken in Ireland in an effort to meet demand. However, they point towards the threat of oversupply stating that the quantum of shopping centre accommodation in Ireland has trebled in the last five-year period to more than 1.5 million sq m, while more significantly, the quantum of retail park development has quadrupled since 2001. There are now 68 retail park developments in Ireland, equating to more than 800,000 sq m of accommodation. A further 105,000 sq m of retail park accommodation is currently under construction around the country, while another 110,000 sq m has been granted planning permission, when the IKEA decision is taken into account.
Paul McCoy, who specialises in retail park agency at CB Richard Ellis, says: "While there would appear to be no major concern at the quantum of shopping centre accommodation planned, there are undoubtedly concerns starting to emerge about the sustainability of all of the new and proposed retail park projects, particularly in provincial locations without the catchment populations to sustain them.
"In a market where there are a finite number of potential retail park occupiers, it is undoubtedly going to become more difficult to secure anchor lettings in some of these schemes during the next few years."
The retail sector has been the best performing sector of the Irish commercial property market for many years. However, this has now changed.
Marie Hunt, director of research and consultancy at CB Richard Ellis, says: "As the supply of retail accommodation in Ireland catches up with demand, we expect that the pace of rental growth will ease. It is also unrealistic to anticipate significant yield convergence in this sector over the next couple of years, considering the yield movements that have been witnessed in the past 12 months alone.
"On this basis, while the Irish retail sector looks set to perform quite strongly indeed, in the medium term, the performance will be somewhat less dramatic than that witnessed during the past decade."
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=== Lettings ===
? Bray
Discount book store operator Bookstation has taken a 195 sq m unit opposite the Florentine shopping centre in Bray, on a new 25-year lease at ?115,000 pa. DTZ Sherry FitzGerald was letting agent.
? Bray
Land of Leather has agreed a 25-year lease on an 870 sq m unit on the Bray retail park at a rent reported to be in the region of ?280 psm. DTZ Sherry FitzGerald was letting agent.
? Dublin
Herbal Inn has taken an assignment of Firmount's 17-year lease on the 103 sq m Unit 122 in the St Stephen's Green shopping centre. The passing rent is ?74,438 pa and a premium of ?50,000 was agreed.
? Dublin
Costa Coffee is to take a new 158 sq m bespoke kiosk on the West End shopping park at Blanchardstown. A 25-year lease has been agreed on a rent of ?100,000 pa with five-yearly rent reviews. The centre's managing and letting agents are Hamilton Osborne King. Costa Coffee was represented by Michael Conroy, property adviser to Tuli Holdings.
? Naas
Clerys Home Furnishings has been secured for the last unit at Globe retail park. A rent of ?270 psm has been agreed. DTZ Sherry FitzGerald was letting agent.
? Tralee
Sound Store has taken the 1,394 sq m Phase 1 of the Mile Height retail park. Joint letting agents DTZ Sherry FitzGerald and Sherry FitzGerald O'Connell are quoting ?161 psm for the 2,265 sq m Phase 2.
? belfast
Supercuts, advised by Leslie Perkins, has taken a 10-year FRI lease on a 65 sq m unit on William Street South at a rental of £36,000 pa. The rent is set to rise to £37,500 pa in years three to five.
? Monaghan
Exhibit has taken a 25-year lease on a 128 sq m unit at Monaghan shopping centre, Dawson Street, at a rental of ?72,000 pa. Newbay Properties was advised by DTZ McCombe Pierce.
