A serious scarcity of city centre retail space in Dublin is pushing rental values skywards, according to the latest report from estate agents Lambert Smith Hampton (LSH). Grafton Street and Henry Street continue to attract the highest rents, and the particularly strong level of trading in the Grafton Street area is having a knock-on effect in adjoining streets.

Wicklow Street, South Anne Street and Duke Street have become highly sought after locations. Wicklow Street, in particular, has been the main beneficiary, with average leaseholds changing hands for premiums of over £100,000.

A combination of the fastest growing economy in Europe and strong consumer spending has contributed to the rise in rental values. This has presented problems for retailers, who are relying on greater sales growth because of increased inflation levels. UK multiples who have a presence here are having to contend with the continuing strength of sterling against the euro.

No new open market lettings have occurred on Grafton Street in the past year, although Number 80, currently occupied by Barratts, has been reviewed to £235 per sq ft for Zone A space. Lampton Smith suggests that a new letting could fetch £280 per sq ft for Zone A, such is its draw for retailers.

One of the most significant recent transactions in the Grafton Street area was a payment by Avoca Handweavers of an £800,000 premium for 11/13 Suffolk Street. The annual rent on the premises is around £155,000. Substantial premises are in short supply in the city centre and have a waiting list of retailers from mainland Europe and Ireland who do not have to contend with currency differentials.

The latest open market letting on Henry Street resulted in a Zone A rent of £240 per sq ft for Half Price Jewellers. This is an uplift on the previous Zone As in the street. In Mary Stret, Number 43/44 is understood to have been let to a major fashion multiple at a Zone A rent of £212 per sq ft, the report says.