Discount retailers help absorb supply of outlets nationwide
WHILE the retail property market performed relatively well in the second half of last year, vacancy levels can vary greatly, from as low as zero in a few Dublin shopping centres to as high as up to 35pc in one centre.
Nevertheless, Aoife Brennan, head of research at Lisney, is relatively optimistic. "There was an increase in the number of enquiries as well as lettings completed and we believe this trend will continue in 2013," she says.
Activity is generally focused on prime units. Terms remain in favour of tenants and flexibility is the key. Pop-up shops are a feature of the market and are being used by many landlords to counter vacancies.
Discount retailers continue to trade exceptionally well throughout the country and some, particularly the single price-point, variety stores such as EuroGiant and Dealz, remain in expansion mode. Other growing sectors include coffee houses and restaurants, many of which took new units in shopping centres and high streets around the country last year and will continue to do so in 2013.
Lettings to fashion retailers were limited in 2012 and this is likely to remain the case in the short term. An exception is the Bestseller Group, which opened new units around the country with brands such as Only, Vero Moda, Name It, Vila and Jack & Jones.
In Dublin city centre, the opening of Abercrombie & Fitch on College Green is positive for the Grafton Street/Temple Bar area and will act as a draw for this part of the city in 2013, particularly among younger consumers.
The banking sector will consolidate further this year with AIB, Bank of Ireland and Ulster Bank due to close branches. This follows the closure of the remaining National Irish Bank branches. These closures will provide opportunities for retailers seeking space. However, future rents for many of these buildings will depend on how conducive they are to conversion to retailing.
Retail vacancy for prime units around the country remained relatively stable, or improved slightly over the last 12 months.
Lisney tracks occupancy levels in Dublin and Cork and Ms Brennan says that Category 1 shopping streets in Dublin city centre saw overall vacancy level reach 11.9pc at the end of September. However, some less prime streets had vacancy rates of up to 24pc.
In those Dublin shopping centres with over 5,000 sqm, of space, the average vacancy rate was 15.7pc with individual centres ranging from zero vacancy up to 35pc. Two had even higher vacancy rates but that may be because they were earmarked for redevelopment.
In Cork it's a similar story. The overall city centre rate was 12.3pc at the end of 2012, however, some streets had rates in the high teens/early 20s and others were as low as 6pc.
"For both cities, we expect these levels to remain relatively stable this year with prime streets and shopping centres perhaps improving slightly," Ms Brennan adds.
She has calculated that the quantum of retail accommodation has remained relatively static in recent years and will not change in the short-term. The only new shopping centre space due on the market this year is an extension to Ballincollig Shopping Centre in Cork.
Currently, the average amount of shopping centre accommodation (i.e. excluding high street retail) per 1,000 of population in Ireland is 367 sqm. This is the sixth highest in Europe, where the average is 241 sqm.
Regrettably, there are examples where up to 1,000 sqm of space services 1,000 Irish people, noticeably in some towns where new centres were built after 2000. These areas continue to struggle and landlords are competing aggressively for tenants and entering into flexible lettings, many of which are on a turnover basis.
We expect the market to improve in 2013. While stores will continue to close, the number will be less. The trading environment should improve, which will lead to an increase in demand for stores. Discounters will continue to expand and drive the market.
With many overseas multiples opening up their websites to Irish consumers, 'bricks and clicks' will become a bigger part of the market and will lead to further erosion of physical shops' market share.