Prime Irish retail investments are now tracking the pick-up evident in the country’s top office markets since 2013; thus, the sale this month of Cork’s long-established Merchants Quay Shopping Centre is expected to gain international traction — despite its relatively small lot size, at a value of just €12.5 million for its 29 shop units and €1.47m rent roll.
The sale of the 27-year old centre bookending Cork’s prime retail thoroughfare, St Patrick’s Street for owners Atrium Nominees, excludes the four key anchors, which are separately owned, and also excludes the busy multi-storey car park.
Those four anchors linked into the centre’s mall are Dunnes (who’ve a new flagship store further down the street), Debenhams, Super Valu and a strongly-trading Marks and Spencers.
When sold and in new management, the leading centre is likely to be redeveloped in line with a grant of planning permission issued last year to Atrium Nominees to reconfigure the store’s current 29 units and malls, to allow for a smaller number of big box retailers within, as well as a new glazed facade in place of the dated and unloved, 1980s’ brick finish.
The current rent of €1.47m equates to a net yield of 11.25%, and once redeveloped rents would rise accordingly, it’s suggested.
Joint agents Savills and CBRE say they anticipate very keen interest in Merchants Quay, given the resurgence of the retail sector in Ireland as an investment choice.
“In 2015, the overall investment spend was €3.58 billion of which the retail investment spend accounted for 28% of market, a significant increase from the previous year.
“The retail market, at least at the prime end, is now where the office market was in the recovery cycle at the beginning of 2013. Merchants Quay offers a unique opportunity to benefit from this recovery, as well as a strongly performing city centre retail location,” they state.
The sale comes as St Patrick’s Street emerges from the nationwide recession and a spending slump, with the new Capitol complex as a counter-anchor at Patrick’s Street’s western end with 53,000 sq ft of retail to open in Q1 2017, and as Penneys prepare to significantly enlarge their central street presence, while Opera Lane has now achieved full occupancy and as a number of long-vacant units mid-street finally get new occupiers.
Expected to consider the Merchants Quay investment/partial redevelopment are the likes of Clarendon Properties and Davy, both of whom have current or imminent Cork city centre retail plays in hand, as well as Varde, who’ve bought two Cork suburban shopping centres, along with the likes of Davidson Kempner, York Capital, Goldman Sachs and Oaktree.
Merchants Quay Shopping Centre was developed in 1989, by O’Callaghan Properties who assembled the very long quayside site stretching from the city’s bus station and turning onto St Patrick’s Street by St Patrick’s Bridge, after much building demolition.
The prime-located shops investment has changed hands several times since, while the abutting former iconic and domed Roches Stores building is now occupied by Debenhams, and Supervalu.
At Merchants Quay Shopping Centre, the changes proposed and to be done by any new owner will boost the income from the current €1.47m, according to Savills and CBRE, noting “with vacancy levels in Cork City Centre at an all-time low, an incoming purchaser is poised to secure a significant foothold on Cork’s premier retail thoroughfare, and will stand to reap the benefit of a reconfigured scheme catering for retailer demand, in turn leading to an increased rent roll.”
There’s over 40,000 sq ft of retail for sale, and the 29 traders include Boots, paying €193,000 pa, Costa Coffee paying €130,000, and Laura Ashley, paying €292,000 pa and fronting onto St Patrick’s Street.
Details: Savills 021-4271371
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