Internationals dipping their toes back into the Irish retail market
Next week a group of Irish estate agents will travel to France in a bid to entice some international retail chains to extend their roll out of new stores at least as far as Dublin City – and possibly beyond to other regional Irish shopping centres.
The latest news on the Irish retail sector is encouraging and therefore this time they are travelling packed up with some positive projection figures – vital in winning the uphill battle to attract new retail interests to Ireland after a succession of bleak years in which international retail interests have avoided Ireland as a commercial disaster zone.
A key influential factor for our travellers will be the recent expansion in Dublin of a number of high profile chains. During the depths of the recession it was the discount retailers who were keeping the Irish retail property market alive. Chains such as Euro General and Dealz snapped-up opportunities to take advantage of store closures and lower rents in order to move into streets and shopping centres where previously rent levels had priced them out of the market. Hard pressed landlords in provincial towns and neighbourhood centres also welcomed them.
Now as their appetite for expansion comes close to satiation, retail landlords are taking succour from the arrival or expansion of more up-market world brands.
In the Grafton Street area Massimo Dutti is already fitting out the former HMV store. Cath Kidston is taking the former Wallis store at the bottom of the street and Vans footwear has also opened a store on the street.
Then just off Grafton, the Swedish fashion retailer Cos has agreed a deal to move into the Tower Records shop on Wicklow Street owned by Clarendon Properties, the partnership between Paddy McKillen and Tony Leonard. Nearby the cosmetics company Inglot have recently opened a new store at South Anne Street.
One of the France bound agents, Darren Peavoy of Bannons, reports that fashion chains Hugo Boss and Levis have requirements to locate in Grafton Street and Dundrum Town Centre.
This is a major turnaround from the end of last year when 11 outlets were vacant on Grafton Street and this was reflected in falling rents.
From having been among the most expensive retail rents in Europe, in the last four years Dublin prime city outlets rents have fallen as low as €300 per sq ft (€3,229 per sqm).
Furthermore rents are continuing to fall in many other areas especially in provincial towns.
However agent Larry Brennan of Savills says rents have now begun to stabilise in Grafton Street and Peavoy says that stories about the death of Grafton Street have been overstated.
Florence Stanley of CBRE reckons that rents on the street are now around €4,000 per sqm. while Larry Brennan says a few of the recent lettings achieved as much as €400 per sq ft (€4,305 per sqm) for key retail floor space known as Zone A space and that incentives for new tenants have been reduced.
But Brennan also sounds a note of caution. "While it's great to see these world brands arriving and occupying flagship stores, and there's a definite pick-up in demand, there's a limit to the extent of the roll out. Some may take only one store in Ireland while others may take a store in other key cities such as Cork and Galway.
"With the advent of online shopping, major retailers are adopting a more strategic approach rather than a universal presence and are confining their stores to key cities where they can benefit from a higher profile and provide a customer service," he adds.
But it's not just Dublin city centre that's attracting the world brands. Ladies fashion accessories retailer Michael Kors has opened in Dundrum having tested the market for its affordable designer handbags with a franchise operation in Brown Thomas. The chain has more than 350 stores worldwide including those in New York, Beverley Hills, Chicago, London, Milan, Paris, Dubai, Tokyo and Hong Kong.
Among the chains which are continuing to expand are fashion retailer H&M which is about to add a new store in the former National Irish Bank branch at the corner of Suffolk and Dame Street. It is also believed to be interested in opening stores in Cork and Galway.
Among the value fashion retailers which are expanding is TK Maxx which have agreed to lease 3,118sqm at the ILAC Centre in Dublin 1 and are also signed up for a store in Clonmel, Co Tipperary.
Superdry are to open units in both Dundrum and Blanchardstown Town Centres.
Apple recently agreed to lease the former Monsoon Accessorise unit in Liffey Valley Shopping Centre and have also agreed to lease a unit at the Whitewater Shopping Centre in Newbridge, Co Kildare.
But the overseas chains also face competition from Irish retailers. Heatons recently moved into the unit formerly occupied by Dunnes Stores at the Northside Shopping Centre in Coolock, Dublin 5.
Kilkenny Design has recently opened new stores at Whitewater Shopping Centre in Newbridge, Co Kildare and Douglas Shopping Centre in Cork.
Meanwhile, Lifestyle Sports are to occupy the former HMV store in Drogheda's Scotch Hall shopping centre where Carraig Donn recently opened a store.
Equally importantly for the Irish agents travelling next week to the international retail property market at the Palais des Festivals in Cannes, is the turnaround in Irish consumer related trends: Employment is on the increase with 45,000 new jobs created in the 18 months to June this year and private sector wages have increased in the 18 months from the beginning of 2012.
Consumers are being brow beaten by DIRT tax increases to dip into their savings and household gross savings are falling from a peak of around 17pc in 2009.
Furthermore, as Dr John McCartney of Savills points out, the increase in Irish and especially Dublin house prices, combined with the 29pc rise in the Irish stock market can be expected to generate a feel good wealth effect among many, if not all house owning, Irish consumers.