Feast or famine?
Published: 19 May, 2008
Now that the Athlone Town Centre is up and running as a very successful new regional shopping centre, questions are starting to get asked about whether the wider Midlands area is going to become over-shopped, that too many mall development plans are in the pipeline, especially as consumer spending slows down. But this hasn't deterred the developers.
An ambitious €200m shopping centre, Mullingar Central, is due to start construction soon, while two big shopping centres are planned for Tullamore, Co Offaly, and a second major centre in Kilkenny is also on the cards.
If it gets the go-ahead, the €300m Citymart scheme in Kilkenny city will become a strong rival to the recently opened MacDonagh Junction centre. Managing director David Lyons is confident that his appeal to An Bord Pleanála against planning refusal by the local authority will ultimately be successful.
These four schemes are just the most visible: many other centres are being planned for the Midlands. John O'Sullivan, the man behind the vast Athlone project, which opened last autumn, says there is a need to service the demographics of the Midlands, but he questions what the retail make-up of all these planned new centres is going to be. "The retail market in Ireland is developing towards maturity and both existing and new centres are being created as regional, district and local centres. Only one centre in the Midlands, our own, is likely to enjoy regional status." He also points out that major retailers roll out their stores on a regional basis and rarely, if ever, open more than one store in a region.
O'Sullivan adds that Athlone Town Centre, combined with the Golden Island shopping centre and high street retailers, adds up to 140,000 sq m of retail and 6,000 car-parking space all in one pedestrian-friendly zone. He expects that over the next few years, substantial further developments will happen within this zone.
Athlone is particularly well placed for this, with all its road access, enhanced by the impending completion of the M6 Dublin to Galway motorway.
John O'Sullivan goes on to say that international retailers, such as H&M, Zara and River Island, will only agree to trade in a centre if the developer is successful in persuading a considerable number of retailers of similar status to trade alongside, and that this was happened at Athlone Town Centre, with many major retailers choosing to open flagship stores there. The most recent to open there was Topshop; the centre itself has just been enhanced by the opening of its Sheraton Hotel.
O'Sullivan expects that the planned new shopping centre developments in Mullingar and Tullamore will have a similar retail make-up to the Manor Mills centre in Maynooth, Co Kildare, which he also developed. This and other similar centres in the Midlands are already successfully serving the everyday needs of their district.
On the other hand, Larry Brennan of HOK Savills says that Mullingar is also very well placed on the arterial road network. He adds that there will always be a place for good schemes like Mullingar Central and that even though the trading environment is now difficult, retailers still have an appetite for Ireland.
Cormac Kennedy, director of retail at CBRE in Dublin, says that Athlone Town Centre has a vital two-year head start over Mullingar Central and Tullamore. But he also says that the Mullingar developers might find it difficult to replicate the same retailing names that have already gone into Athlone.
If the new centres being planned meet modern retailer requirements, the possible over-supply of malls shouldn't be a concern. Whether the consumer downturn has an effect on consumers' level of demand remains to be seen, but Kennedy points out that people still need to eat and buy clothes. But consumer uncertainty in a declining national economic scenario makes it harder to plan ahead and predict shopping trends.
Karl Stewart, retail director at DTZ Sherry FitzGerald, is more sceptical about Athlone Town Centre. "It's now open, to mixed reviews, but the more traditionally dated Golden Island shopping centre has continued to trade well despite the attractiveness of the new scheme, with its impressive tenant mix".
DTZ is currently working on the Fairgreen scheme in Mullingar, which is anchored by Penneys and recently also Marks & Spencer.
He points out that elsewhere in Mullingar, there's the Harbour Place development, the oldest centre in the town, while Bennett Construction was recently given the go-ahead to build the €200m Mullingar Central scheme, which will include 22,000 sq m of retail. It's due to open in 2011.
Stewart says that while Mullingar is a thriving town, it has be asked whether it can sustain three shopping centres. Two of out of the three will succeed, depending on which one delivers the best tenant mix. Mullingar won't be getting just Mullingar Central; another, smaller, scheme in the offing is Lynnpark Development's retail warehousing, which was recently granted planning permission.
Similar criteria apply in other towns in the Midlands where big mall developments are planned. In Tullamore, Co Offaly, home of the new Taoiseach, Brian Cowen, a couple of schemes are being planned. One is a €100m development by developer Eamon Duignan, which is planned to extend to about 23,250 sq m. It will be anchored by Penneys, in a two-level store with close to 6,000 sq m. The centre will have around 50 shop units and depending on the planning process, it is planned to open at the end of 2010.
DTZ Sherry FitzGerald says that negotiations are already nearly complete on just over 11,000 sq m in the proposed centre.
The other scheme, even bigger, is the €150m Moritz project; the developers recently withdrew their appeal lodged with An Bord Pleanála and are drawing up new proposals for the site.
Bannon Commercial is advising Moritz on this proposed scheme, which will have more than 15,000 sq m of retail, a cinema, offices, an arts centre and 36 apartments, along with almost 1,100 car-parking space. Says Bannon's Peter Levins: "The site is just 200 metres from the very centre of Tullamore and will become an extension of the town centre".
Eamon Duignan is also planning a massive shopping centre and apartment scheme in Carlow, already well provided with malls. His plans for a site on the Kilkenny Road in Carlow are for over 22,000 sq m of retail space, in 26 units, as well as residential and office. In Portlaoise, another key Midlands town, already well provided with retail facilities, planning permission was granted recently by Laois County Council for a €275m development, including a shopping centre with a large anchor and 12 retail units, proposed by Firestone Developments of Cork.
Marian Finnegan, chief economist with DTZ Sherry FitzGerald, says that Ireland now has 1.8 million sq m of shopping centre space, an increase of about 200,000 sq m during 2007. She says that this equals to 417 sq m per 1,000 people. For Dublin, the figure jumps to 617 sq m per 1,000 population, but in the Midlands, the figure is 428 sq m per 1,000.
So while the Midlands is considerably under-developed by comparison with Dublin, the question remains whether the region is actually going to end up with far too many malls.
Finnegan's colleague Karl Stewart says that turnover rents may be the way forward in this uncertain period.
He continues: "There's no doubt that the glut of space in the Midlands will create strong competition between developers and a conundrum for retailers as they decided which is the best option. With towns getting several new centres, the key is going be the anchor."
"It's going to be an interesting area as it evolves and there'll undoubtedly be some losers," says Karl Stewart, who's conclusion sums up the general feeling about the Midlands. In larger towns, such as Carlow, Kilkenny, Mullingar and Tullamore, it'll be a question of which mall developments survive, while the many smaller towns in this vast region face a draining away of shopper footfall to larger centres.
