Retail rents in capital 'to spike by 9pc'
Retail rents in the capital will rise by 9.3pc by the end of 2016, a trend that is likely to reignite the row over so-called 'upward only' rent reviews that flared up ahead of the last election.
Increases are expected across Dublin's main shopping districts, including out-of-town centres, but at a mix of paces, Among the biggest forecast rent rises is a 16.5pc increase for shops on Grafton Street.
That is according to a report by Savills, based on a model devised by its economists and the ESRI.
They forecast retail rents will grow at an accelerating rate over the next 18 months, after increasing 3.7pc in the past year.
Rising population and economic recovery mean there are more shoppers and they are buying more.
"Our analysis shows that retail rents are particularly sensitive to employment and population growth. Ireland is experiencing the fastest rate of jobs growth in the EU and Dublin's population is now rising at its second fastest rate in history. These factors have re-ignited demand and this is driving competition between shopkeepers for the best retail units," according to Dr John McCartney, director of research at Savills said.
Restaurant space in prime retail areas is particularly sought-after, with rents for the segment currently standing at around €750 per sq m in the city centre and €550-€650 in the main Dublin shopping centres, according to Savills' Larry Brennan. In the mid-range family dining segment, international chains such as Prezzo, 5 Guys, Ask, Nando's and Zizzi are all active in the market, he said.
Dublin's population has risen by 43,000 people over the last two years and the weight of numbers is driving sales and causing retailers to take more space, independent of jobs growth and consumer sentiment, he said.
Pressure for space is not helped by almost a decade of stagnation following the economic downturn. Some development is under way. A new extension at Liffey Valley Shopping Centre is due to open early in 2016, and an expansion of the Kildare Village outlets development is scheduled to open before the end of the year.
However, Clerys department store shut controversially this year, and Boyers will close its doors at the end of January. Redevelopment of both sites is likely to take years.