The Covid-19 pandemic sent shockwaves throughout global communities, dislocated international supply chains, triggered steep selloffs in financial markets and disrupted the real estate sector. Out of all the property sub-sectors, high street retail has been the most impacted with vacancy levels rising in every global city centre retailing location.
A stroll down Grafton Street with its numerous shuttered units more than demonstrates the negative impact felt here in Ireland. The strengths that made it our pre-eminent retail destination suddenly became the greatest weakness, as the natural customer base and main footfall drivers – shoppers, tourists, office workers, students, etc – all but disappeared and for extended periods of time.
It could be argued that Covid-19 merely accelerated the demise of well-known retail brands that were either unable or unwilling to adapt to rapidly changing market dynamics. This is especially true of the many retailers from our nearest neighbour who also had to face the additional challenges of a Brexit-troubled trading and supply chain environment.
However, whatever the causes, the recent spike in vacancy is unprecedented and much sharper than that experienced following the recession of the late noughties.
Today there are currently 15 non-trading units on Grafton Street (both upper and lower sections). This represents a vacancy rate of 17 per cent in terms of overall unit numbers. This includes 14 previously occupied units along with one unit currently being redeveloped by Irish Life. By comparison, our Colliers International Retail Occupancy Tracker showed just 2 units vacant as of February 2020. The equivalent rates in the main shopping centre and retail parks are sub 5 per cent and sub 2 per cent respectively.
In our opinion, the 17 per cent figure is somewhat misleading and overstates true vacancy levels. When looking at high-street locations and in particular Grafton Street, the overall vacancy in floor area terms is arguably a better barometer as unit sizes are substantially smaller than those in shopping centres and retail parks. When the current Grafton Street vacancy level is looked at in these terms, the vacancy rate can be calculated as 10.3 per cent.
We are now, hopefully, in a post-Covid era with our economy rebounding surprisingly well and with any concerns around any long-term structural damage to our economy in retreat. The fundamentals of Grafton Street as a retailing location have not changed and what we missed in the last two years, apart from shoppers, were trading shops.
Indeed, only one new retailer, athleisure brand Lululemon opened on Grafton Street during the entire of 2020 and 2021. This stands in stark contrast to the period following the last recession, where a wave of new international retailers including Hugo Boss, Massimo Dutti, Levi's, Space NK, Ted Baker, & Other Stories, Dune, The White Company and North Face all opened for business on the street.
With Covid-19 having receded as a threat, we now anticipate a fresh influx of new, high-profile occupiers. Lego have already announced they are to open at number 41 while Russell & Bromley have just signed a lease at number 76.
In addition to these, we are aware of at least five lettings currently in progress on Grafton Street and once these complete, vacancy levels will immediately drop from 17 per cent to 11 per cent in terms of unit numbers and from 10.3 per cent to 7.1 per cent in terms of retail floor area. This is a conservative estimate of leasing activity, and we fully expect to see additional transactions advancing in the coming months which will bring vacancy even lower by year-end. No doubt, overseas retailers have noted the success of Lululemon since its opening just over six months ago which will support their view that Dublin is a key location in any international expansion programme.
Eoin Feeney is director of Colliers retail division