Saturday 3 December 2016

Retail recovery starting to take hold outside Dublin

Ronald Quinlan and Donal Buckley

Published 17/11/2016 | 02:30

Grafton Street ranks internationally while the vacancy rate in Ireland’s other cities is now falling
Grafton Street ranks internationally while the vacancy rate in Ireland’s other cities is now falling

A new report on the retail sector suggests that Ireland's economic recovery has begun to spread beyond Dublin and its immediate commuter counties of Kildare, Meath and Wicklow.

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According to the latest CBRE retail market report, which is due for publication today, vacancy rates have either reduced or stabilised in most towns and cities.

Athlone, Co. Westmeath, which has the worst vacancy levels, has seen them fall from a high of 21.6pc in 2014 to 18.2pc earlier in the year and 14.9pc in the latest quarter.

Sligo's O'Connell Street has also improved and while it still has the second highest vacancy rate in the country, it is down from 17.5pc in Q3 2014 to 15pc six months ago and 12.8pc in the third quarter of this year.

In Kerry, Killarney's vacancy rate practically doubled in Q3. Nevertheless, it is still the third lowest in the country at 3.5pc.

Cork's high street vacancy has more than halved from 19.5pc in the first quarter of 2015 to 8.1pc, and confidence in the city centre's future is reflected in John Cleary's €50m retail and office development on the Capitol site, which fronts on to Grand Parade and is due for completion next summer.

Limerick's O'Connell Street has seen vacancy levels fall from 9.3pc last spring to 7pc, while Waterford also shows a good improvement in vacancy to 5.8pc. Levels stabilised in Kilkenny at 5.5pc and Galway at 2.8pc.

Bernadine Hogan, senior director at CBRE Ireland's retail team, said: "A notable buzz has also returned to the high streets of Cork, Sligo and Waterford."

But while the volume of retail sales across all areas increased by 3.4pc in the first nine months of 2016, consumer sentiment dipped to a 22-month low in October as uncertainty surrounding events such as Brexit began to influence the public's expectations for the economy.

Despite this, footfall levels in Dublin have held up, with CBRE reporting that the capital's combined high street vacancy rate of 2.58pc includes units that are reserved or close to fit-out, and all streets are in fact close to, if not at full occupancy.

Suzanne Barrett, a director at CBRE Ireland's research team, said the lack of availability on Dublin's prime high streets had fuelled rental growth, with prime Zone A rents on Grafton Street increasing by 15pc year-on-year to €6,300 per square metre per annum, and prime Zone A rents on Henry Street increasing by 29pc year-on-year to €4,500 per square metre per annum.

The demand for Grafton Street and Henry Street was further borne out in Cushman & Wakefield's Main Streets Across the World 2016-2017 report, published yesterday. According to it, Grafton Street now ranks 13th in rental positioning by country internationally, having experienced rental growth of 4.8pc in the year to June. Cushman & Wakefield says prime rents for Zone A on Henry Street now stand at €4,685 per square metre as opposed to the €4,500 figure reported by CBRE.

Karl Stewart, Head of Retail at Cushman & Wakefield Ireland, said: "The demand for both Grafton Street and Henry Street continues to grow and as larger bespoke floor plates and buildings come on stream, it will provide more suitable accommodation for new entrants."

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