Irish Life, Hammerson: Can They Deliver For Dublin Retail?
Dublin retail is not fit for purpose, and needs a rethink. And Irish Life and Hammerson could be the developers to do it, given their prime holdings in the city.
So says a new analysis from Cushman & Wakefield, which showed that Dublin shops are overwhelmingly small, and many are multilevel.
But will the developers with the best portfolios be able to tune out the noise around the future of retail?
Dublin's city centre retail development scene is showing signs of re-awakening after a 10 year slumber.
Confidence has been boosted by retailer Next's decision to take 35K SF at 7-9 Henry St. in space developed by Fitzwilliam Real Estate Capital.
The Cushman & Wakefield report points to Irish Life — whose holdings around Grafton Street have grown rapidly — and long-awaited plans for Hammerson's Dublin Central at Henry Street as potential game changers.
"Given the volume of retail transactions which have occurred over the past number of years in the investment market, it is plausible that further refurbishments and redevelopments will take place in the future," the report said. "For example, Irish Life now owns 19 units on Grafton street, the most recent acquisition being No. 80 (Molton Brown), which has sparked thoughts of possible amalgamations of units on the street."
"Elsewhere, investment portfolios such as the Grafton Collection and Project Madrid, which include units on surrounding streets such as South William Street, Clarendon Street and Duke Street, may also lead to further development of units."
Ignore The Noises Off
“We’ve had basically no movement in Dublin city centre retail development over the last decade, and now we’re seeing developers dusting off their own plans and saying it is starting to make more sense to act on them,” Cushman & Wakefield Head of Retail Karl Stewart said.
“What they have to overcome is background noise saying bricks-and-mortar retail is dead. But it isn’t — not for prime — and demand for flagship fashion stores, 20-30K SF, is good. Look at Next, and they are not the only ones looking for a really special store in Dublin, I had two more approaches from retailers this week.”
Stewart said there are more requirements coming, and that both Hammerson and Irish Life should take heart from a growing list of requirements.
“Dublin has emerged as a focus for retail requirements, and the Hammerson site is excellently placed to catch them. Now that Hammerson have dealt with the historic issues on that site, there is no doubt they have the firepower to go ahead.
“As for Irish Life, it is very difficult to say what a fund will do. They have the resources to act, but they have loud noises on one side telling them retail is off the investment agenda, and on the other noises saying it's an opportunity. The truth is prime retail really is an opportunity. We’re seeing a flight to prime.”
Irish Shoppers Are Spending Again
In April Hammerson appointed ACME as architect for the 5.3-acre Dublin Central site, which currently provides 1.4M SF of floorspace. The move followed a declaration from the Court of Appeal that part of the Moore Street site was not a national monument to the 1916 Rising.
According to Cushman & Wakefield, now is the time to build. "Developers, landlords and retailers have to respond to changing consumer and retailer demands in an effort to keep up," its report said. "We are seeing a response to this from many of the owners in the form of modest, albeit growing, retail development activity."
Larger retail footprints, shopping centre reconfigurations/upgrades, and an increasing provision of food and beverage and leisure offering are all evident in the market. The current market can be seen as an opportunity to adapt assets to meet these changing demands.
Cushman shows that 39% of shops in the Henry Street district are under 1.5K SF and that 56% are under 2.5K SF. In the Grafton Street area the figures are 47% and 72% respectively.
Multilevel retail accounts for 24% of Henry Street retail and 14% of Grafton Street retail.
Data from Savills suggests Irish retail spending, excluding motors, remains in a robust growth mode, with sales up around 6%. Those sectors associated with housing are growing partiuclarly fast, Savills said, with furniture (14.5%), electrical goods (8.4%) and DIY (7.7%) all outperforming the market.
