The continuing consolidation in the Irish retail market by UK multiples was one of the main factors behind an increase in site values and rents this year. Sites for large developments were thin on the ground and this caused fierce competition, with Tesco Ireland prepared to pay £25 million for a stand-alone, 11-acre site alongside the Liffey Valley shopping complex in west Dublin.
Despite the cries of a British invasion, this year saw few new entrants to the market. Sainsburys, which has been planning to move into the Republic for many years, failed to produce concrete plans.
Safeway, which has grown in the North in recent years, is also looking at sites, but has yet to show its hand.
Another potential new rival for the established players, Costco, was rebuffed when An Bord Pleanala refused to give planning permission for a 11,500 square metre "shopping club" to be built near Clondalkin in west Dublin.
Around 35 per cent of the space would have been used to sell food, with the rest given over to consumer goods.
The issuing of an interim directive by the Minister for the Environment, Mr Dempsey, earlier this year which limits the size of supermarket developments to 3,000 square metres (about 32,000 sq ft) of selling space was one of the crucial decisions of the year.
Many people in the retail trade say until this is sorted out, no large British retailer will be prepared to enter the market. Developers say the directive complicates the planning process and makes forward planning difficult. Mr Dempsey has appointed consultants to examine the effect of superstores and they will produce a finalised directive. Some people in the retail trade are worried the final directive may be more restrictive than the interim one, although this outcome would be welcomed by smaller, independent traders.
In Dublin, the extension of Liffey Valley will intensify competition with its near neighbours, the Blanchardstown Centre and The Square in Tallaght. South Dublin County Council is expected to adopt its draft development plan next Friday and this will probably mean Liffey Valley can be extended by as much as 250,000 sq ft.
It is understood that of the 250,000 sq ft of extra space, some 45,000 sq ft will be used for a food store. According to Aidan O'Hogan, managing director of Hamilton Osborne King, there will be no shortage of tenants for the extra units, including two prime 25,000 sq ft sites.
A major department store is also likely, with sources suggesting Debenhams, Penneys and Clerys as potential tenants. For those looking for something smaller, there will be 30 units of 5,000 sq ft also available. Blanchardstown is looking to compete with the newly opened Liffey Valley and has ambitious plans of its own with 195,000 sq ft of space due to come on stream in the second phase of its retail park (see article on retail parks).
Stephen Murray, of Jones Lang Wootton, says the volume of shoppers coming through Blanchardstown is evident in the cost of leaseholds in the existing part of the centre.
He says the first small unit to be re-let at the centre went to computer games retailer Game for £150,000, which was an 84 per cent increase on what Shoe Express, the previous tenant, paid to the landlords, Green Property, about two years ago. Dundrum, in south Dublin, looks like being a hive of activity next year with plans by the Irish Pension Fund Property Unit Trust to sell Dundrum shopping centre. Alongside this, the 21-acre Pye site in the village is to be developed as a major shopping complex likely to measure 350,000 sq ft.
The site will also include a 15-screen cinema and hotel, which will be built around a civic square. A planning application has been made and a decision is expected soon.
TESCO will be involved in both developments, as it has a Tesco branded store in Dundrum shopping centre and owns the Super Crazy Prices store near Sandyford.
If the Pye complex gets the go-ahead, there will be shopping available from the start of Dundrum village right up to the beginning of Sandyford.
The expansion of housing and the possibility, however distant, of LUAS serving the area, are what will drive retail demand in the location, says HOK, the agents handling the scheme. On Dublin's O'Connell Street, the Carlton Group has plans for a five-floor shopping development which seeks to bring back "middle class activity" to the heart of the city.
There will be 100,000 sq ft on each floor and the developers, led by businessman Richard Quirke, say the mix of outlets will be very carefully balanced. Other shopping centres set to be extended in Dublin are Stillorgan, Phisboro and the Square in Tallaght, while Dun Laoghaire is likely to undergo a serious refurbishment programme after being sold to a private consortium for about £20 million earlier in the year.
The frenetic activity in Dublin is being repeated elsewhere. In Cork, several retail surveys have indicated that the city and surrounding county is not adequately served by retail developments.
The 250,000 sq ft Mahon shopping centre site on the southside of Cork city hopes to capture some of the demand. It will include a supermarket of 40,000 sq ft and a 70,000 sq ft department store. Tesco is understood to be interested in taking the supermarket. The site will also include a 10screen cinema and 2,000 car-parking spaces.
An extension to the Wilton Shopping Centre on the northside of Cork is also planned, but is currently being held up by a planning appeal. Tesco and Roches Stores are already in the centre, but the additional 80,000 sq ft will mean some other large retailers joining them, probably at rents of about £60 per sq ft. In Sligo, Tiernan Properties has produced a plan to regenerate the town centre and is looking to build an "interconnect" which would house one of the large supermarkets, with Superquinn and Dunnes Stores being mentioned. There are plans for at least one major shopping centre on the outskirts of the town.
IN terms of the multiples, expansion and growth continue. During the year, Boots announced a major growth programme; Marks & Spencer is looking to purchase extra sites around the country, with Limerick and Galway the most likely areas.
Meanwhile, Tesco expects building to have started on two new stores by the year 2000, in addition to its £75 million refurbishment programme. One is likely to be on the Mahon site in Cork, while the other may be in Limerick.
In Dublin city centre, property values remain buoyant, with rents in Grafton Street reaching £200 per sq ft for Zone A property.
Elsewhere in Dublin, the story was similar with rents rising and independent chains, such as Supervalu/Centra, expanding in the suburbs on the back of a £105 million development programme.
Frozen food chain Iceland and furniture/ DIY stores such as Texas, Homebase and Atlantic Homecare, have also been expanding in the urban centres.
Apart from shopping centres, rents in Cork and Galway are also moving up. Cork's Patrick Street, for instance, is currently achieving Zone A rents of about £125 per sq ft, with Zone A in Galway at times achieving between £100 and £125.
Stephen Murray said the huge increase in retail spending in the Republic in recent years means many UK retailers "prefer" the option of moving into the Irish market than expanding at home. However, he says that with interest rates set to fall in Britain, yields are likely to improve there.
Mr O'Hogan says yields in the Republic are declining, but notes that commercial rents are not following the dramatic upward curve seen in the residential market. He says Tesco's offer of £25 million for the 11-acre site beside Liffey Valley is "exceptional", but does indicate the uplift in the market.
With Liffey Valley Zone A property renting for about £140 per sq ft and any new lets in Blanchardstown likely to reach the same, there is no doubt prices are rising for tenants. What this might mean, says Mr O'Hogan, is that in the future, larger retailers will concentrate on refurbishment, rather than on building new outlets.
