CBRE’s most recent retail report for Q3 2016 outlines continued improvement in occupancy on many streets and across a variety of centres countrywide. This is occurring on the back of international and local occupiers recognising a continued recovery in the Irish retail market.
Thus, international businesses in particular are gaining confidence to expand beyond the Dublin Metropolitan Area to centres around the country.
According to the report, over the six month period to September the Irish retail sector has continued to perform strongly. As you would consequently expect, occupier activity has remained buoyant throughout the country’s prime locations.
Despite positive headline figures, all is not bright on the horizon. The pace of retail sales growth has eased on a month to month basis. Having noted this, however, sales volumes remain strong across almost all sub-sectors.
The annual growth for September 2016 comes in at 3.9%. While this is a positive for retailers, the latest Visa Consumer Spending Index highlights one of the chief challenges for bricks and mortar stores. Online spending in Ireland has increased by double digit figures for the fifth time in six months.
CBRE’s Suzanne Barrett says that active international and indigenous occupiers have impacted positively on occupancy levels on many of the country’s high streets over the past six months.
Ten streets surveyed to assess countrywide vacancy rates show either a reduction or stability in vacancy rates in Q3 2016.
Five national locations noted an improvement in occupancy rates, Athlone and Limerick recording the biggest decreases in vacancy rates over the six month period, down 3.3% and 2.3% respectively. Vacancy on Limerick’s O’Connell Street has dropped by 2.3% to 7pc.
The report notes that a retail market vitality has returned to the high streets of Cork and Waterford in particular. In these areas new entrants have led to significant improvements in occupancy rates. As a result both have recorded improved footfall levels.
Cork’s prime vacancy has reduced by over 50% year on year to just 8.1pc with Waterford also showing improvement with a reduction to 5.8pc. Killarney is an oddity in Munster with rising vacancy rates, although still posting a modest 3.5pc rate overall.
In Dublin, unsurprisingly, footfall remains consistently strong despite ongoing construction works. Headline high street locations such as Grafton Street and Henry Street are now close to full occupancy once ongoing works are concluded. Lack of availability has fuelled rental growth with prime Zone A rents now topping €6,300 per square metre per annum — a 15% annual increase.
Prime shopping centre rents remained stable for the period while prime retail warehouse rents increased by 9% year on year. Bernadine Hogan of CBRE says retailers appear to be taking advantage of the momentum in regional high street locations at present with significant activity in larger retailers relocating to better locations on the same street.
She says the challenge going forward is to find the right space for occupiers in prime locations, with many high streets and prime shopping centres nearing full occupancy.
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