Retail rents on Dublin’s Grafton Street — once the fifth most expensive main shopping street in the world — are likely to rise by more than 15 per cent, a global real estate services provider has warned.
Fuelled by a growing trend in controversial “upward only” rent reviews, shop rents across the Irish capital as a whole are predicted to rise by 9.3 per cent by the end of 2016. Savills claims the hikes will affect all Dublin districts including out-of-town retail parks.
Based on an economic model devised by the agency’s economists and assisted by ESRI, an international supplier of Geographic Information System software, Savills says: “shop rents will grow at an accelerating rate over the next 18 months, after increasing 3.7 per cent in the past year”.
A key reason, it adds, is the ever growing Irish population combined with the economic recovery, “meaning there are more shoppers who are buying more”.
“Our analysis shows that retail rents are particularly sensitive to employment and population growth,” explained Dr John McCartney, director of research at Savills.
“Ireland is experiencing the fastest rate of jobs growth in the European Union and Dublin’s population is now rising at its second fastest rate in history. These factors have re-ignited demand and this is driving competition between shopkeepers for the best retail units.”
The population of the Irish capital has risen by 43,000 people over the last two years and the weight of numbers is driving sales and causing retailers to take more space, “independent of jobs growth and consumer sentiment”, he added.
In a second note of caution, Savills states that restaurant space in prime retail areas is particularly sought-after, with rents for the segment currently standing at around €750 (£541) per square metre in the city centre and €550-€650 (£397-£469) in the main Dublin shopping centres. “In the mid-range family dining segment, international chains such as Prezzo, Five Guys, Ask, Nando’s and Zizzi are all extremely active in the market,” said Savills’ restaurant specialist Larry Brennan.
Attempting to justify the impending rent rises, the agency says: “Pressure for space is not helped by almost a decade of stagnation following the economic downturn, but some development is under way.
“A new extension at Liffey Valley Shopping Centre is due to open early next year, and an expansion of the Kildare Village outlets development is scheduled to open before the end of the year.”
Other Dublin sites could stand empty for years. Clerys department store closed earlier this year, and Boyers & Co — Ireland’s oldest department store — will shut its doors at the end of January. So far no plans have been unveiled to redevelop the properties.