Retail body issues warning amid reports of rising high street rents

Retail Excellence Ireland has sounded a note of caution following the release of a report suggesting that improving consumer confidence has led to strong demand for retail space and subsequent rent increases.

A report released yesterday by property consultants, Savills Ireland indicated that a combination of improving consumer sentiment and improving retail sales has resulted in rising retail rents in highly sought-after urban locations. This, the report claimed, was being driven by a shift in employment structure as part-time jobs are being made permanent in light of a deepening recovery.

“Improving sentiment and sales have seen demand for retail space rise significantly, with competitive bidding for prime properties becoming commonplace. This in turn has led to rental increases in prime locations,” said Savills chairman Larry Brennan.

Reacting to the report, Retail Excellence Ireland deputy chief executive, Seán Murphy said that talk of retail rents starting to rise is at best premature, and hard to take.

“While there is no doubt that activity levels and consumer sentiment are improving, this is on the back of a slump in the Irish economy that was only exceeded among OECD members by Iceland since the noughties.

“It is vitally important that commercial rents reflect these economic realities,” said Mr Murphy.

“While many retailers have not been able to secure reductions due to their being tied to upwards only rent contracts, talk of rents actually increasing is hard to take or to believe. There will always be certain transactions that are out of line with the broader rental market conditions, but these should not be used to extrapolate macro trends in the market.”

Mr Murphy warned that rents must be set at sustainable levels to protect jobs in the retail industry.