While few, if any, retail markets across the globe have escaped the recession unscathed, the Irish retail market remains particularly fragile. The latest data from the Central Statistics Office shows that Ireland’s annual retail sales fell by 9 per cent in the year to August 2009. But according to a bi-monthly research report provided by CBRE, things are continuing to move tentatively forward.
Despite the economic backdrop and the pressures that many retailers are currently experiencing, a number of new and existing retail tenants continue to expand and take advantage of the attractive deals on offer at present,” says Marie Hunt, director of research at CBRE.
“The most significant transaction announced in recent months was the letting of the former Habitat unit on Suffolk Street in Dublin city centre to the Cult fashion brand.”
CBRE’s research report notes several other lettings, such as UK retailer Jack Wills’ recently announced plans to open a 283-sq m unit off Grafton Street.
Sports Soccer and Next are also due to open stores in Carton Park in Maynooth and River Island are taking a unit in Navan, Co. Meath. Meanwhile in Cork city, the first store officially opened in the Opera Lane development, which will eventually provide a high-profile retail mix including Gap, Hennes, Apple and Tommy Hilfiger. And the Showgrounds development in Clonmel, Co. Tipperary also opened its doors to the public in recent months.
So it seems that, despite the sizable impact the recession has had on Irish sales figures, the retailers are still taking advantage of the opportunities in Ireland’s towns and cities. Anne-Marie Murphy, a director at Savills’ Belfast-based retail team, notes this trend in Northern Ireland’s retail. “There is activity; things are happening here. Deals are taking a bit longer to get over the line, but major players are taking advantage of the market,” she insists.
Belfast’s Victoria Square, for which Savills acts as managing and letting agent, has recently seen the opening of a Timberland store – the centre’s fourth new retailer since July. And that’s not all: Kurt Geiger opened its first store in Ireland at Victoria Square in May; and Ireland’s first Hollister store was unveiled there earlier this year.
The strengthening of the euro is attracting more people over from the Republic of Ireland – Murphy confirms that 20 per cent of shoppers have come up from the south – which may have bolstered Northern Ireland’s retail. But as Murphy points out, the key to survival is to have a solid foundation in the market place.
“Strong retail centres will continue to do well in cities such as Belfast and even in places like Craigavon. When retailers go into administration it does create opportunities, and if the scheme is strong enough then you will be able to replace them,” she says.
This is certainly true of Victoria Square, where new retailers have stepped in to fill units made vacant by the loss of brands such as FCUK. But Hunt at CBRE is careful to point out the reality for Ireland’s shopping centres and retailers that aren’t quite as resistant. “Prospects for global and domestic economic recovery appear to be improving. However, the reality for many retailers is that maintaining margins is going to continue to prove extremely difficult for the foreseeable future and there are likely to be many more casualties in the retail sector after the Christmas trading period, particularly if the forthcoming Budget impacts further on discretionary spending.
“There is increasing evidence of retail tenants successfully negotiating rental reductions from landlords. However, with demand weak and an increase in turnover deals, there is as yet only limited open market rental evidence to demonstrate the extent to which headline rents in the retail sector have fallen from peak,” adds Hunt.
