Developers urged to ‘keep up’ with evolving retail picture
Improvement in the economy has led to a loosening of the purse strings for consumers
The market is struggling to provide quality large units on streets such as Grafton St, which are desired by new entrants.
The retail environment is “evolving rapidly” both in terms of physical stores and e-commerce, with the improved economic conditions leading to a loosening of the purse strings by consumers, according to a new report.
The Retail Development Pipeline Ireland report, published on Thursday by commercial real estate company Cushman and Wakefield, argues that developers, landlords and retailers must respond to changing demands in an effort to “keep up”.
“The market has gradually entered a new cycle, with rents moderately rising and a notable shake-up in the ownership landscape,” it says.
“In this new era, personal consumption, consumer sentiment and employment levels are all trending upwards, resulting in much improved fundamentals for the retail economy.”
Until relatively recently, the report notes, construction activity “has been stagnant”, with no major retail construction since 2011.
“This has resulted in a supply challenge in some prime areas,” it says. “In particular, the market struggles to provide quality large units on the prime streets such as Grafton St and Henry St, which are now desired by new entrants to the market.
“In response to this challenge, the past 18 months have seen an increased focus on retail development on the surrounding streets.
“As there is a growing trend among retailers of having fewer stores, a higher importance is placed on opening stores in key areas,” the report says.
“The snapshot of [Grafton St and Henry St] emphasises the need for further amalgamations and large format units to accommodate and attract more new entrants to the city centre.”
Outside of Dublin city centre, development activity consists “primarily of extensions and refurbishments”. Although, to date, most extensions have been on “a small-scale”, the works have nonetheless “added greater value” to retail centres.
In response to the shortage of suitable units on Grafton St and Henry St, development activity has emerged in the surrounding areas, enabled by new infrastructure such as the Luas Cross City line.
“Although it remains too early to gauge the extent of the impact this will have on retail, it is widely anticipated that footfall will increase and it will act as a catalyst for further development and expansion beyond the traditional core streets,” the report says.
“In the previous cycle, the wider Dublin area witnessed a large volume of new space being delivered to the market in the form of both new shopping centres and retail parks.
“However, in the current cycle, development activity is more focussed on expansions and upgrades. This work aims to not only enhance the look and feel of the centres, but also to improve the retail, food and beverages, and leisure offering.”
The report says that consumer needs “have evolved” over recent times, demanding more diverse space which not only provides the products consumers wish to buy, but also an area they can eat and enjoy leisure time.
In terms of retail development outside of Dublin, signs of expansion are also “beginning to emerge, albeit at a slower pace”.