FOR the human body, a doctor will assess a patient’s well-being by their general appearance and by checking their blood pressure.
Similarly, the ‘health’ of a street can be equally judged by its overall appearance, and the equivalent measurement to human blood pressure, is the assessment of the level of vacant units.
Extreme vacancy levels can cause the ultimate decline of retailing on a street. Equally, vibrant occupancy, adds to the vigour of the street and to the overall health profile of retailing.
The level of occupancy within Cork city centre varies between streets. Vacant premises are a fact of life — even in good times, and hence vacancy levels of up to 10% are considered normal in the short term. Similarly, if vacancy levels exceed 20%, the street will be underperforming and exhibiting material stress characteristics — and there is a risk that further decline (if not arrested), will kill the attractiveness of the street for retail business.
A recent DTZ Sherry FitzGerald Survey of Cork city centre ground floor premises illustrates the following street vacancy rate:
* St Patrick’s Street: 12%
* Oliver Plunkett Street: 8%
* Paul Street: 3%
* Winthrop Street: 0% (100% occupied)
* Maylor Street: 11%
* North Main Street: 16%
* Cook Street: 25%
* Academy Street: 35%
(Note: Non-trading premises were classified as vacant)
Looking at St Patrick’s Street — who are the retailers? It breaks into 65% domestic and& 35% international. About 92% of shops are comparison high order retailing, of which 45% are clothing or footwear retailers.
St Patrick’s Street currently has a 12% vacancy rate, which is most prevalent at either end of the street with little vacancy on the prime pitch, which is between Brown Thomas and the Princes Street junction. If one scratches below the surface it is interesting to note that the majority of vacant premises are less than 900 sq ft. The remaining four premises comprise the former AIB at 67 Patrick street, former A Wear, Mothercare and the recently sold Moderne premises.
There is demand from national and some UK retailers looking for opportunities on St Patrick’s street for shops with a ground floor regular footprint of between 1,500 and 3,000 sq ft but the product isn’t available. This demand and investor confidence can be illustrated by the recent speculative purchase of the Moderne by a Dublin-based investment vehicle for a price reportedly in the region of €4.5m, with a view presumably to accommodate a ‘big box’ retailer and possibly food use for part of the building. Golden Discs also took a lease on the 5,000 sq ft former HMV premises.
In recent years, demand for small shops on St Patrick’s Street has deteriorated as modern retailers require larger ground floor footprints, for economies of scale and due to the high business costs including rates. Availability of appropriately-sized shops to match new retailer requirements is, therefore, an issue on the street contributing to vacancy levels.
Oliver Plunkett Street is performing well, with a vacancy rate of only 8% and is proving an attractive location for retailers with favourable lease terms coupled with a pedestrianised trading environment. Demand is strong for shops on the prime pitch between the GPO and Princes Street and there is a lack of supply of units with a footprint of 750 sq ft plus at ground floor.
Winthrop Street is at 100% occupancy and Paul Street is also nearly full except for a unit that is letting agreed, and the former Newport Bar has been sold to Wetherspoons. Princes Street has one vacant premises. Academy Street fairs worst with a 35% vacancy rate with four premises vacant. Unfortunately for Academy Street, the nearby Opera Lane scheme which is nearly 100% occupied and an important element of the city centre retail offer, has altered pedestrian flow between Patrick street and Paul Street, which now generally by-passes Academy Street.
In summary, buildings with the right configuration in prime locations will continue to perform best to the detriment of poor buildings in secondary locations which will struggle to attract occupiers.
It is in the city’s best interest that shop vacancy is kept to a minimum. Occupancy of vacant buildings could be encouraged by local authorities offering a scheme whereby a new business will be allowed 100% rebate of rates in year one and 50% rebate of rates in year two. Also, an American concept of business improvement district schemes (BIDS) encourages retailers and building owners to take a proactive approach of coming up with ideas to promote and improve the trading environment of a street and they work in collaboration with their local authority.
* Seamus Costello is a chartered surveyor with DTZ Sherry FitzGerald.
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