Prices for retail investment properties could prove more resilient than other sectors of the commercial property market this year following renewed interest in retail leasing opportunities and a resurgence in consumer and tourist shopping in bricks and mortar locations in 2022. This is the view of commercial property specialists CBRE in its annual Outlook report published on Thursday.
“Prime high streets and shopping centres enjoyed strong growth in sales and footfall in 2022, as the market benefited from a deluge of pent-up consumer demand,” the firm’s head of research Colin Richardson told those who attended the launch.
He predicts sales of some shopping centres, high street, supermarkets and grocery-led retail properties as likely to experience the strongest demand. He also suggests that prices for retail properties may not soften as much as those in other commercial sectors.
“Given the recalibration in retail asset pricing over recent years, we expect softer yield expansion in this sector versus what may be seen in other commercial property sectors.
“The full reopening of retail across Europe and the freedom for parties to travel helped to spark renewed interest in retail leasing opportunities and we saw a number of exciting new brands enter Dublin.”
The vacancy rate on Grafton Street is now down to just six units
Retail leasing has turned a corner and the vacancy rate on Grafton Street is now down to just six units, with this expected to fall further in 2023.
He also expects more retailers to follow Frasers onto Henry Street following the latter’s move into the former Debenham’s store.
“As a result of the pandemic, Dublin’s prominent retailers are now leaner operations, with the strongest performers well-positioned heading into 2023.”
Furthermore with Ireland’s household savings ratio above pre-pandemic levels, “this will act as a positive catalyst for spending heading into the new year (and) experiential retail and omnichannel strategies continue to underpin retail business models”.
Another busy year of transaction and development activity is expected and the firm’s managing director Myles Clarke said: “While we will likely face some headwinds in 2023, the underlying long-term constructive outlook for the Irish economy continues to attract occupiers and investors.”