Grafton Street: What does it cost to rent a building there? It depends which part of it you want

International retailers talk to one another about what markets are working for them, according to Eoin Feeney, head of retail with Colliers estate agents. And the current view is that Ireland in general, and Dublin in particular, are strong sales markets.

“And that’s why we have so many new international brands on the street, particularly since Covid,” says Feeney, referring to Grafton Street, a key location for a man whose work includes advising big brands about potential locations in Dublin.

“There is a healthy list of retailers who want to be on the street, but there are not enough opportunities, which is very positive.” Among the issues facing retailers wanting a presence on Dublin’s premier shopping street is not just a building becoming available, but one of sufficient scale, given the relatively small size of so many of the buildings on Grafton Street.

After the recession, a new wave of retailers began to open outlets on Grafton Street, Feeney says. “Nobody has left of that wave. They came and a lot of them have expanded. They opened on Grafton Street and then they spread their wings [elsewhere].”

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Feeney, and head of research at Colliers, Kate Ryan, keep a close eye on who owns buildings on Grafton Street and who is renting space there. Before the pandemic, in 2019, 2.2 per cent of the units and 2.3 per cent of the retail floor space on the street was vacant, according to the Colliers data. By 2021 those figures had surged to 18 per cent and 10.5 per cent respectively.

By last year, however, the vacant units were down to 5.6 per cent and vacant floor space to 3.5 per cent.

The street is getting back on its feet. As most of the vacancy is at the College Green end of the thoroughfare, there is almost full occupancy in the pedestrianised stretch.

“So saying that bricks-and-mortar retail is dead is just wrong,” says Feeney. More than 20 deals for new tenancies were completed for Grafton Street since the beginning of 2022, with more deals on adjacent streets such as Chatham Street, Duke Street and South Anne Street.

“In January, it was announced that Zara was going to double the size of its store on South King Street, by moving into the building next door [that was] previously occupied by H&M. This will make it the largest stand-alone fashion outlet in the area, and reflects the desire among some types of retailer for very large floor space outlets.

Nevertheless, the funds that have for so long owned so much of Grafton Street are rebalancing their portfolios to make them lighter on retail. This, according to Feeney, is partly because they were “spooked” by the rise of online sales and the effect of the pandemic. The BER ratings of the buildings on Grafton Street may also be a factor, with many not meeting the requirements of investors seeking greener investments.

[ Who owns Grafton Street? Wealthy Irish families and faceless funds control 119 of Dublin’s most valuable buildings ]

A shift from fund ownership to private investor ownership has been taking place, with the Colliers data showing that the percentage of the buildings on the street owned by funds has gone from 59 per cent in 2019 to 46 per cent in 2023. Over that time, the percentage of the buildings owned by private investors has gone from 23 per cent to 36 per cent.

As reported earlier this week, the private investors are in the main rich Irish individuals and families, with JP McManus, the Brennan family of Brennan’s bread fame, the Keaveney family of the Peter Mark hair chain, Eamon Waters of Panda waste fame and Brian McKiernan, the former chief executive of Davy, among those who own buildings on the street.

The move from funds to private investors is still progressing, the latest ownership data indicates, although Irish Life remains by far the largest property owner on the street, owning 21 of the 119 properties between College Green and St Stephen’s Green. Foreign investment is not a growing factor, though the US Hines group has a significant presence, not just on Grafton Street but also on Chatham Street and South King Street – where it owns the building occupied by Zara – and two buildings on the College Green end of Grafton Street have Chinese owners.

When it comes to the value of retail space, ground floor space is worth substantially more than space on upper floors, and space closer to the front of the shop is worth more than space at the back, Feeney explains. The most valuable space – the 20 feet inside the door on the ground floor – secures the highest price per square foot in rent. With each 20 feet back from the front entrance, the price per square foot drops in value.

So a shop that is 20 feet across, for example, might get €500 per square foot for the first 400sq ft inside the door, then €250 per square foot for the next 400, then €125 per square foot, then €62.50 per square foot and so on. Meanwhile, upstairs you might get €20 a square foot for the first floor, €15 for the second, and €10 for the third.

One of the effects of this is that it militates against the use of the upper floors of many of the buildings on Grafton Street, which often have narrow footprints reflecting their origin as town houses, or retail outlets with residential accommodation upstairs. Sacrificing floor space on the ground floor to put in suitable access to the upper floors, and complying with fire regulations, often doesn’t make commercial sense as the rental income lost on the ground floor by installing the necessary infrastructure is not recouped from renting out the space on the upper floors.

Before the pandemic a prospective tenant – the Australian stationers Smiggle – was reported to have agreed a rent of €650 per square foot on Grafton Street. When the deal didn’t go ahead, Ray-Ban reportedly took over the property – number 32, owned by Irish Life – at the same rate. However, this was an outlier and a more typical price for the most expensive space on the street, according to Kate Ryan, is in the €500-plus per square foot region.

Rents are still not back at the €575 per square foot that was the estimate for 2019, and are still a long way from the €770 per square foot estimate for 2008.

Indicative information about rents, and the use of different floors in a building, can be gleaned from the Commercial Lease Register. Number 107 Grafton Street, which is owned by JP McManus, has a 15-year lease dated April 2023, with an average annual rent of €220,000, according to the register. This lease is presumably for the ground floor, which is occupied by BoyleSports, though that is not stated on the lease.

The upper floors of the building are occupied by a surgery and the register shows a second lease, for four years and nine months, also dated April 2023, for the first, second, third and fourth floors, with an average annual rent of €34,250.

Number 76 Grafton Street has a 10-year lease dated May 2022 on the register, with an average annual rent of €300,000. The lease says this is for retail on the ground floor, and the storing of stock in the basement and on the first floor. There is no mention of the other floors in the four-storey building. Number 76 is owned by members of the family behind Jameson whiskey and is currently an outlet of the Russell & Bromley footwear and bag shop.

Number 69 is owned by Iput plc, with the ground floor currently an outlet of Dune footwear and the Robert Chambers hair salon upstairs. The ground floor (retail) and basement (office and stock) are the subject of a 15-year lease, dated January 2016, with an average annual rent of €337,500, according to the register. The first, second, third and fourth floors are the subject of a separate 20-year lease dated December 2015 that carries an annual rent of €54,000.

Many of the buildings on Grafton Street originally had independent access to the upper floors, according to Richard Guiney, chief executive of Dublin Town business group.

“The trend in the ‘60s and ‘70s was to take out the independent access to the upper floors and bring that into the ground floor, because that is where the value is. But now, looking at how people’s shopping behaviour has changed, we should look at reintroducing access to the upper floors. I think that is something that needs to be looked at. There is a huge amount of underutilised space.”

Country lane to fashion destination: the history of Grafton Street

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While Grafton Street might not be a suitable location for apartments, the upper floors could be used for other purposes, he says, mentioning artists’ studios, for example, for musicians as well as visual artists.

Getting more use out of city-centre buildings adds to a city’s vibrancy and attractiveness, and if a fresh view has to be taken on such matters as fire regulations and access for the disabled, that is what should be done, Guiney says. “There is plenty of space just lying idle. We need a grown-up conversation about this.”

[ Grafton Street’s story: How a downbeat country lane became an upmarket home for A-listers, hotels, Turkish baths and shops ]

He was disappointed that the city council did not accept the argument during preparation of the latest development plan to change the categorisation of Grafton Street from being a category-one retail street. “More people are coming to the city to dine rather than shop,” Guiney says, citing Dublin Town’s ongoing monitoring. The retail category for the street is “obsolescent at this stage” and needs to be changed to more mixed use.

Dublin Town monitors the footfall on some city-centre streets. Last week, 775,000 people were recorded on Grafton Street. Given the view that the camera captures a person roughly 1.5 times, the headline figure equates to about 445,000 or 500,000 visitors. Grafton Street is a very busy street even by international standards and while not all pedestrians are there to spend money, many are. Footfall last year was above 40 million, though the “busyness” of the street was still more than 17 per cent below 2019 levels.

In discussing the changing nature of city centres with business groups internationally, Guiney has come to the view that there is more than increased online shopping behind a softening of the draw of shops as a reason for visiting a city centre.

“People are buying fewer material goods, they have smaller homes, smaller family units, less storage space. And they are spending more money going out and enjoying themselves, and I think that is going to be a feature, going forward,” he says.

That said, the most recent data collected by Dublin Town has seen shopping rising up the ranks, to second place from fifth, as a reason for coming into the city centre, often alongside a stated reduction in interest in online shopping. “It’s just one set of figures, it’s not a trend, but I think it is very interesting and something we are going to be keeping a very firm eye on. I think we are going to see more people shopping in bricks-and-mortar stores.”

The pandemic, and the hybrid working patterns it did so much to promote, has left its mark. Weekends, according to Guiney, are “back to, or even a bit ahead of where they were before the pandemic, but certainly Monday to Friday is well down”.

“The model is to come [into the office] two days a week, so that is certainly affecting us, and I don’t think we will ever get that back. But certainly the footfall on Grafton Street is still very strong. The feedback we have from the property owners is that there is still considerable interest in space that becomes available.”

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