Shops, shops, more shops

SHOPPING space in Dublin will continue to grow until the end of the century, according to a new report. Total retail stock will reach over 5 million square feet; however, the report warns this growth will undoubtedly put pressure on some existing centres.

The space will translate into five square feet per head of population in Dublin, according Larry Brennan of Hamilton Osborne King (HOK), who was involved in preparing the report.

"This will undoubtedly put pressure on some existing centres, particularly those which do not benefit from the ease of access provided by the M50 C-ring motorway or do not enjoy a broad tenant mix," he says.

Mr Brennan says some centres will be forced to "rethink their existence". This may entail refurbishment, re-branding or a change of emphasis to a centre catering for specialist needs.

"In the worst case, there may be a need to move completely away from the standard shopping centre use, he says.

However, the immediate future looks assured. Over 800,000 square feet of new retail space has come on the market in Dublin this year, says Mr Brennan. It represents a 23 per cent increase in the city's total shopping centre stock.

Mr Brennan says retailers do not seem to think that Dublin has become over-shopped and points out that take up in all the new developments has been unprecedented. All are virtually fully let.

He attributes demand and retailer confidence to a number of factors.

"Retailers' balance sheets have improved with the general economic upturn, coupled with the coming of age of many of Ireland's baby-boom children," he says.

Retailers have adopted an "if you can't win" attitude and are covering all the angles by ensuring they have a presence in the new schemes, says Mr Brennan.

"Many UK retailers now trading here have enjoyed considerable success," he says. "As a result, a significant amount of take up has been from UK retailers either expanding their Irish holdings or coming to Ireland for the first time."

Mr Brennan says shopping in the city centre will become a far more pleasurable experience because of developments such as the Jervis Shopping Centre and the redevelopment of Arnotts and the extension of St Stephen's Green.

"Henry Street has lost its recent `poor relation' image," he says. The £500,000 key money paid by Dixons for a ground floor store in the Jervis centre has caused significant waves in the retail market, he says.

He believes this has prompted a number of retailers, including Peter Mark and KC Confectionery, to test the leasehold sale market. "Well-known Mary Street publican John Keating is to embark on a development which will see him demolish and relocate his pub and build a new 12,000-square-foot retail unit in its place," he says.

Outside Dublin, Brennan says, the retail markets in Cork, Limerick, Galway and Waterford remain particularly good. Demand is greatly outstripping supply.

"Such market conditions will undoubtedly lead to developers turning their eyes to the cities and we may see speculative retail development in the future," he says.

The HOK report says the estimated market turnover so far this year is over £200 million - which will equal the 1995 level.

"Again the office and retail sectors of the market made up the majority of this year's turnover, 40 per cent and 33 per cent respectively, proving once again that this was where most of the opportunities have appeared," it says.

The proportion of tax-based transactions has fallen from almost 40 per cent of turnover in 1995, to around 25 per cent in the year to date. "This is due to the lack of supply, which has resulted in yields hitting an all-time low of around 5 per cent for the shops at the IFSC," it says.

The report predicts that yields will continue to fall - as prices will increase into 1997, particularly for tax-based projects. It says yields should then stabilise by 1998.

HOK says overall growth will remain in the "mid-teens" throughout 1996 and 1997 with the industrial and retail warehousing sectors showing the highest average returns.

It forecasts that more Irish investors will be seeking to invest in the UK as investment opportunities become scarce.

It concludes that there is likely to be more pre-funding of schemes and institutions may become involved in direct development, especially within the industrial sector.