Saturday 20 October 2018

Public appetite for dining out is giving property industry food for thought

An artist’s impression of the Ivy restaurant, which is due to open for business at 13-17 Dawson Street in Dublin 2
An artist’s impression of the Ivy restaurant, which is due to open for business at 13-17 Dawson Street in Dublin 2

Donal Buckley

The food and beverage sector (F&B) is one of the retail sectors which appears to be withstanding two key pressure trends: rising rents and online operators. However, while competition for pitches remains strong, it is not quite as strong as it was two years ago, even in parts of Dublin city centre.

Emma Coffey of Lisney has noticed that "some of the UK operators who were pounding the streets two years ago have pulled back following the closures of two UK chains as well as the uncertainty over Brexit."

Nevertheless she says that some of them are still here and cites Zizzi, an Italian offering which has opened in Dundrum and Suffolk St and is looking for other outlets in Dublin, Cork and Galway.

She also says that some existing F&B operators who expect lucrative key money to transfer their leases are not being realistic.

"Only about half a dozen have achieved such premiums in the last two years and those have been for very strong pitches where the size suits the new occupier," she adds.

Among the other international chains currently seeking space are Milano/Nando's and Vapiano.

Irish operators on the expansion trail include Press up, the Paddy McKillen Jr-led chain which includes brands such as Wow Burger. It has recently acquired Residence on St Stephen's Green and Elephant & Castle in Temple Bar.

Five Guys is looking for more space after having agreed to move into the expanded Frascati centre in Blackrock. Local food experts such as Dylan McGrath are also taking units in selective locations.

Lisa McGrane of JLL, who is looking for stores at the moment, is in discussions on two Churro's outlets. Another of her clients, the French brand L 'Entrecote, is seeking 3,000 sq ft but she says it cannot pay the prevailing prime F&B rents of €100 per sq ft.

Ms McGrane says that based on European trends, F&B looks set to increase its share of the retail market. "Trends across Europe would suggest that F&B could accommodate up to 20pc of floor space. We are not near that level in Ireland," she adds.

Another factor boosting demand is the growth in pop-up style food that can operate in semi-permanent sites to provide additional diversity and test-product performance. She cites Amorino, the luxury ice-cream, macaroon and coffee chain. Such trends have helped to transform the former dowdy financial services and banking precincts such as College Green, Dawson and Dame Streets as well as secondary retail streets such as Camden St and Wexford St into one major leisure area, stretching from Merrion Row to Temple Bar and Harcourt Road.

Indeed the former Central Bank itself is targeting a significant portion of its floor space at F&B. US developer Hines has hired agents BNP Paribas Real Estate to find tenants for 16,000 sq ft at its Central Plaza level and a further 17,000 sq ft at the ninth and tenth floors. It is believed to be quoting €100 per sq ft.

Meanwhile Dawson St, with its corporate dining restaurants, is currently undergoing another phase of development. Green Reit has agreed to let a 9,580 sq ft unit at 13-17 Dawson St to the international Ivy chain for €550,000 a year, which works out at less than €58 per sq ft, reflecting the scale of the unit.

While its 20-year lease has no breaks, the landlord has agreed a 12 months' rent-free period.

Meanwhile the agent Bernadine Hogan of CBRE is quoting €550,000 for the adjoining unit which extends to 9,073 sq ft over ground and lower-ground levels.

Around the corner in the same development, Le Pain Quotidien is taking 2,400 sq ft.

Across the street, Friends First has been transforming the F&B offering at its Royal Hibernian Way where Press Up has recently agreed to take a 3,900 sq ft unit for a new restaurant to be called Isabelle's.

Just up the street, Tetrarch is planning a redevelopment which will deliver a 119-bedroom hotel in conjunction with a refurbished Royal Irish Automobile Club.

Meanwhile, if the 20pc of retail space were to apply to the redevelopment of Nassau House - which Meyer Bergman and BCP are about to undertake on the street's north-western corner - it would provide more than 16,500 sq ft of F&B space. But it has not yet decided on what the retail mix should be.

In contrast, one area which needs more upmarket F&B outlets is O'Connell St. The hope is that the combination of tree-lined footpaths, the extension of the Green Luas line and a settlement of Moore Street's 1916 heritage issue could pave the way for Hammerson's development of the Carlton site. It is also hoped that the Clery's redevelopment will get underway.

Meanwhile, supply is on the increase in suburban shopping centres, as reflected in Hammerson's recent deal to attract Fallon & Byrne to a new 10,000 sq ft speciality food hall, delicatessen and restaurant at Dundrum Town Centre.

In what can be seen as an increasing trend among shopping centre owners to boost footfall and increase the amount of time that shoppers spend in their centres, the project will include a new 8,000 sq ft basement-level leisure space, which will be located under Dundrum's Pembroke Square, and an additional 3,500 sq ft restaurant space will be provided at Ashgrove Terrace, a vacant row of old redbrick houses which face onto the main Dundrum roadway.

Marie Hunt of CBRE points out that a number of suburban schemes including Frascati Shopping Centre, Dun Laoghaire Shopping Centre, Blackrock Shopping Centre and Stillorgan Shopping Centre in south Dublin are upgrading their offerings by carrying out extension and refurbishment works. All the M50 shopping centres have, or are in the process of, obtaining planning permission to facilitate extensions.

In addition, several planning applications for new retail schemes are due to be lodged this year, including a scheme in Carrickmines in south Dublin, while planning for a scheme in Cherrywood was lodged last year.

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