No sign of pressure lifting as 'turbulent times' continue in retail sector
City centre traders and those in shopping centres in the Dublin area are experiencing “turbulent times” and have been forced to reduce costs and margins, said Aiden McDonnell of Colliers International.
The situation outside the Dublin area, he said, was amplified with more pressure from the downturn in sales. Many retailers had engaged in lease restructuring or rent reduction negotiations, often trading lease breaks or extending leases which were close to expiry.
Landlords were under pressure, particularly in shopping centres, to grant concessions to larger store groups. In addition, leading retailers had been using lease breaks to lever rent reductions from landlords.
McDonnell recalled that retail sales had fallen significantly since 2008 (down by an average of 18 per cent in volume and 19.6 per cent in value). These averages included convenience sales dominated by supermarket sales.
Colliers report said that while we were witnessing a continuing decline in sales, this trend was slowing down. However, a harsh budget could accelerate this downward trend.
McDonnell suggested that prime Zone A rents on Grafton Street are now €3,767 to €4,305 per sq m (€350/€400 per sq ft) while Henry Street was at €2,690 to €3,229 per sq m (€250/€300 per sq ft). In real terms, rents were back pretty much to 2002 levels – but then in many cases so were turnover levels.