Retail rents down 50% from peak

RETAIL rents in prime Dublin shopping areas have plunged as much as 50% from peak levels, according to property consultant CB Richard Ellis.

It said this level of decline is “considerably higher” than the peak-to-trough rental declines experienced in other European cities.

Retail rents in the Irish market will remain under pressure for some time yet, the consultant said, in a report published yesterday.

Overall retail sales for the year to April were down almost 4%. Around 11,600 shoppers per hour were recorded on Grafton Street on Saturdays in the second quarter of 2011, down 4% on the same period last year.

In comparison, around 11,200 shoppers per hour were recorded on Henry Street on Saturdays in the same period, a 10% drop on 2010.

The report said that while the underlying economic situation will continue to impact severely on discretionary spending, the outlook for prime shopping centres and the main high streets in Dublin is considerably better than many provincial and secondary schemes or locations.

“While conditions will remain difficult for the foreseeable future, many retailers see the current downturn as an opportunity to invest for future growth,” the report stated.

“Many are focusing their attention on developing their multi-channel platform and reducing their traditional dependence on physical stores.”

CB Richard Ellis said that many retailers continue to announce new entry and expansion plans, taking advantage of the ability to secure attractive terms and conditions from landlords in the current climate.

The report said 26% of international retailers now have a presence in the Irish market, up from 25% from last year, making Ireland the 32nd most international retail market in the world.

The vacancy rate of ground floor units on Grafton Street is around 1.1%, according to the report, compared to 3.2% at this stage last year.

The vacancy rate on Henry and Mary Street is 0.3% compared to 5.8% in 2010.

Retailers claim that huge uncertainty remains about Government proposals to review rent review mechanisms in all business leases. In many cases, landlords are giving generous concessions to tenants who demonstrate genuine difficulties in meeting rental payments, the report noted.

Director of the retail department at CB Richard Ellis in Ireland Michael Harrington said: “The retail sector in Ireland remains very challenging.

“We are encouraged by the fact that there are many new entrants considering locating here.”