Prime retail settling despite examinerships
Despite the recent examinerships which saw some retail chains force down rents, some stability is returning to the prime-retail property market in terms of rents and activity. This is the view of Jones Lang LaSalle which says that the reputational damage associated with examinerships does not seem as concerning to retailers anymore.
On the other hand CBRE point out that while the examinership route is prohibitively expensive for most retailers, it expects "to see other retailers following suit and strategically going into examinership over the coming months in an effort to cut their Irish operating costs".
They also report that Monsoon Accessorize have emerged from examinership having repudiated leases on nine of their stores and agreed reduced rental terms with landlords on the remaining stores while 12 of the Pamela Scott stores that were in examinership have done deals with landlords.
JLL reports that occupier activity remains focused on prime product whilst secondary properties struggle in comparison. Core high streets and stronger performing schemes continue to perform steadily, with a number of active comparison and restaurant retailers in the market for space. "There has been some take-up in the retail warehouse park sector this quarter, with a number of retailers looking to take advantage of the low values available, however demand in this sector remains challenging overall," says its head of research Hannah Dwyer.
JLL reports prime Zone A rents in Grafton Street ranging between €350 and €420 per sq ft while those in Henry Street range between €280 and €340 per sq ft. This compares to CBRE's estimates for the former at €4,000 per sqm (€372 per sq ft) and the latter at €3,500 per sqm (€325 per sq ft).
Jll estimates Zone A regional centre rents at €170 to €300 per sq ft, older suburban schemes at €30 to €35 per sq ft and prime retail parks between €10 and €20 per sq ft. CBRE says the latter are €215 per sqm (€20 per sq ft) and estimates secondary city centre Zone A rents at around €1,000 per sqm while secondary retail warehouse rents in the provinces are around €80 per sqm (€7.43 per sq ft.)
Florence Stanley deputy managing director at CBRE says that the market is somewhat of an enigma with retail sales subdued and significant churn in the high streets and shopping centres throughout the country while on the other hand strong volumes of transactional activity are being recorded in the retail property sector.
CBRE also suggests optimism by recent decisions of some owners to refurbish, expand or develop. NAMA is to fund the refurbishment of the Northside Shopping Centre in Coolock, Dublin 7; Gerry Barrett is to develop a cinema and leisure facility at Scotch Hall, Drogheda; Irish Life is to add five new large stores and a cinema at the Stephen's Green Centre and Bord Pleanala has overturned South Dublin County Council's refusal for a Tesco supermarket at Liffey Valley.
In addition BWG has announced plans to open 80 stores this year under the Spar, Mace and XL brands.