Grafton Street has sixth highest high-street rents

Dublin's Grafton Street has the sixth highest retail rents of any high street in the world according to a new report by Lisney's international partners Cushman & Wakefield.

Grafton Street trails behind Fifth Avenue in New York, Causeway Bay in Hong Kong, Avenue des Champs-Elysées in Paris, Ginza in Tokyo and New Bond Street in London.

The report compares 231 in-town shopping locations in 44 countries.

This year, Zone A rents on Grafton Street were €9,500 per sq m (€882.5 per sq ft). This is over 450 per cent above the global average (€1,715 per sq m), but 21 per cent below the €11,983 per sq m (€1,113 per sq ft) on Fifth Avenue, New York.

According to Lisney, Grafton Street rents grew by 18.75 per cent in the year to June 2007, compared to an average growth of 11.2 per cent in the eurozone.

The largest ever sale of a retail investment on Grafton Street was to property developer David Daly, who paid €115 million for the River Island store and adjoining Wallis outlet (previously owned by Arnotts).

The remodelled store was first offered for sale at the end of 2003 when Arnotts looked for over €50 million after agreeing a new Zone A rent of €13,751 per sq m (€1,275 per sq ft), but there were no takers. The rent level was then over double the going rate on the street.

Other rents have been creeping up in the meantime and, Tommy Hilfiger recently signed a lease for its new store on the opposite side of the street. The rent will be around €12,000 a sq m.

According to Lisney economist, Dr John McCartney, Grafton Street's high ranking in the rental league reflects strong occupier demand for shops. "There is definitely a certain kudos attached to having a flagship store in this location and that will always be a factor in driving rents.

"But the demand for shop space also reflects Ireland's economic performance in recent years," he says.

Hugh Markey, retail director at Lisney, says: "Compared to the main retail thoroughfares in other cities, Grafton Street is relatively short. In addition, many of the units on the street are not of a scale appealing to multinational retailers."

McCartney believes that 2008 is likely to see some slowdown in retail activity.

"While consumption growth will remain reasonably robust, it will slow from the 6.1 per cent recorded in Q2 2007 to around 4 per cent next year. Considering this, and the amount of new retail supply to have come onto the market in the last year, I would expect some slow down in the rent growth generally," says McCartney.