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There has been more interest and activity in the retail sector this quarter, with increased enquiries, demand and deals signing. The market is showing some stability, particularly for prime high streets and shopping centres and the leisure sector continues to perform strongly. There has also been an increase in consumer spending which demonstrates increasing confidence in the sector. Active demand from the previous quarter is now turning into lettings, in particular, there has been a lot of activity on Grafton Street, with a number of deals with key occupiers closing in the last 3 months. The increased activity is now leading to limited availability in these prime locations, with decreasing choice for occupiers, particularly those with certain size requirements. Despite the increased demand and decreasing supply, there is still no sign of rental increases, however if the strong demand continues, this may cause some rental impact in the short-medium term for prime space.
Provincial schemes continue to struggle in comparison to prime regional-sized centres, and retail parks continue to be challenged across the country, with limited demand and depth in the sector. Hannah Dwyer, Head of Research said “it is positive to see that after 6 years of difficult market conditions, the resilience of the retail sector is starting to pay off. In the last 3 months we have seen a pick-up in the level of activity, with retailer demand for space advancing into signed deals. The Grafton Street retail area has had a very active quarter, with Cos, Massimo Dutti, H&M and Cath Kidson all occupying space in the prime retail street. There are also 2 other major deals that are close to signing which will help to further boost the retail offer in this part of town and will also reduce availability of space in Grafton Street to 6 units. Disappointingly, we have also seen number of retailers enter examinership this quarter, with high rents and lower-than peak consumer spending being blamed by struggling retailers for difficulties. Homebase, Carl Scarpa and Pulse have either requested or entered into examinership in the last 3 months”.
Stephen Murray, Director of Retail Agency suggests that “The outlook points to a continued reduction in vacancy in the principal streets and major regional scale schemes. There is also more activity and a bit more market depth with retailers sensing that the number of worthwhile opportunities in the strongest locations are narrowing, with the risk in due course of albeit modest rental increases. However, retail has become quite a tiered market and very attractive and flexible deals remain available in secondary and tertiary locations throughout the country”.
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