Retailers Remain Active Despite Declining Sales
Transactional activity holding up well in the retail sector against a difficult backdrop.
For a copy of the full Retail Marketview Q2 2011 PDF report please see link further below.
Dublin, 31st May 2011 – Property consultants CB Richard Ellis today released their latest report on the Dublin retail sector, which indicates that from a property perspective, transactional activity has been holding up relatively well. According to CB Richard Ellis, despite the fact that consumer sentiment is still weak as evidenced by the most recent data from the Central Statistics Office which showed that retail sales in Ireland have declined for 39 consecutive months, 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.
Retail sales activity remains fragile
There has been some improvement at a sectoral level in the Irish retail sales market in recent months. However, in the year to April 2011, overall retail sales are down 3.9% year-on-year.
Many retailers are taking advantage of current market conditions and pursuing expansion plans
From a property perspective, transactional activity in the retail sector has been holding up well with a number of retailers, both Irish and international, announcing entry and expansion plans, taking advantage of their ability to secure attractive terms and conditions from landlords in the current climate. However, it is taking some time to complete deals at present.
26% of international retailers have a presence in the Irish market
26% of international retailers now have a presence in the Irish market, up from 25% last year, making Ireland the 32nd most international retail market in the world. In comparison, Dublin ranks 65th out of 150 cities in terms of the number of international retailers that have a presence in the capital.
Vacancy on Dublin’s high streets is negligible
Although retailers on Dublin’s high streets have experienced very difficult trading conditions since the onset of the economic downturn and there have been several high-profile closures, aggregate ground-floor vacancy on the prime high streets in the capital is approximately 0.6% in Q2 2011, compared to 5.0% this time last year. The vacancy rate of ground floor units on Grafton Street is approximately 1.1% according to CB Richard Ellis compared to 3.2% this time last year while the vacancy rate on Henry/Mary Street is 0.3% compared to 5.8% this time in 2010. This clearly demonstrates that there is strong demand from retailers to let units being vacated in prime locations, albeit on shorter leases and reduced rents.
There has been a decline in footfall on Dublin’s Grafton Street and Henry Street year-on-year
Despite the volume and value of retail sales on Dublin’s high streets falling over the course of the last three years, the average footfall on the capital’s high streets has remained relatively consistent over the period. However, compared to this time last year, footfall on both Henry Street and Grafton Street are down 10% and 4% respectively.
Rents remain under downward pressure
Having already experienced declines of more than 50% from peak levels in 2007, rents in the retail sector of the Irish market remain under pressure, particularly in secondary and provincial schemes.
Uncertainty about Government proposals on lease reform
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.
Virtually no new retail development coming on stream
Research conducted by CB Richard Ellis shows that the total stock of shopping centres in Ireland is forecast to reach 2.06 million square metres by the end of 2011 while the total stock of shopping centre accommodation in Dublin by year end will be approximately 570,000 square metres. In comparison, there is now 1.32 million square metres of retail park development in Ireland with just over a quarter of this accommodation located in Dublin. There were no retail parks completed in Dublin in the last two years.
Commenting at the launch of the Dublin Retail Marketview report, Michael Harrington, Director of the retail department at CB Richard Ellis in Ireland said “The retail sector in Ireland remains very challenging. While the underlying economic situation will continue to impact severely on discretionary spending for the foreseeable future, the outlook for prime shopping centres and the main high streets in Dublin is considerably better than many provincial and secondary schemes and locations. We are encouraged by the fact that there are many new entrants considering locating here and that many retailers are continuing to purse expansion plans but frustrated to some extent by the length of time it is taking to conclude transactions at present.”
About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2010 revenue). The Company has approximately 31,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our Web site at www.cbre.com
In Ireland, with offices in Dublin and Belfast, CB Richard Ellis is the country’s largest commercial real estate services company, now employing over 140 employees and offering a full range of property services including property sales and acquisitions, leasing and management, investment, corporate services, project management, consultancy, valuations and research. CB Richard Ellis Ireland has been listed among the Best Workplaces in Ireland, 2011, for the seventh year running. Please visit our website at www.cbre.ie or www.cbre.ie/ni