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There are mixed messages from the retail sector this quarter with further store closures and examinerships matched by news of new entrants and existing retailers actively looking for space. The underlying sentiment in the sector is however largely negative, and is impacted by weak consumer sentiment, low rents and values, short term lettings (including pop-up shops) and high levels of vacancy in some schemes.
Dublin high streets and larger shopping centres are performing steadily, particularly in comparison to other high streets across the country. There is limited demand for medium-sized schemes which are struggling to compete with larger centres for key occupiers. Retail warehouse parks continue to struggle with only limited demand for key schemes and no demand for secondary schemes. There are a few active retailers looking for retail warehouse park space but they are being selective and are only looking for prime stock with the expectation of low rental levels.
There have been additional group closures in Q1 2013, with HMV, Blockbuster and Jessops going into administration following poor sales. B&Q Ireland, has appointed an examiner to rescue the business, which has been hit by the decline in consumer spending. Other examinerships announced in the quarter include Pamela Scott and the Monsoon Accessorize chain. Fashion retailer Republic has also closed its Irish stores after going into liquidation.
The recent Grafton Street Bewley’s High Court decision interpreting upward rent review terms will undoubtedly cause some impact on the retail sector. There is already evidence that the ruling has caused many stronger retailer tenants to scrutinize their rent review wording.
Despite low consumer sentiment and spending, some retailers are showing resilience with a number of new and existing retailers currently active. H&M, Specsavers, Boots, Carraig Donn, Lifestyle Sports, TK Maxx, Kilkenny Design, Smartspot, Inditex (owner of Zara), Sketchers and Schuh all actively looking for space.
Stephen Murray, Director of Retail stated that “There was improved activity and sentiment in Q4 2012 providing a good finish to a generally stabilising year for the retail sector. The restructuring moves of various retailers such as B&Q, Monsoon and the closure of HMV and Republic has brought more space to the market than anticipated with a cooling of sentiment in Q1 2013. Once this has been absorbed it is likely that the signs of stability evident last year will recur later in the year. The result is more likely to be seen in lower vacancy levels in the stronger schemes rather than any significant rental growth in 2013”.
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