There seems to be no end to development in the Irish retail sector. Around 457,000m2 of projects are planned – for a country with a population of just over 4m. This puts it 11th in Cushman & Wakefield’s research into European shopping centre pipeline development for 2006-07 – behind countries such as Russia, Poland, and Turkey, which each have much larger populations.
Pertinent question
But can Ireland’s retail market sustain the growth? It is a pertinent question, particularly given that the amount of retail floorspace has doubled over the past five years.
According to figures from CB RichardEllis, almost 1m m2 has been developed since 2001, bringing the total amount of retail space to 1,641,200m2.
Marie Hunt, a director with CBRE, says that the amount of space being built merely represents Ireland catching up with the rest of Europe. She adds that recent figures predict that the country’s population is set to grow by another 1m, hitting 5m in 2020 – so all the retail growth is necessary.
The appetite of Irish consumers reinforces the need for growth. Cushman & Wakefield’s European pipeline report states that the country’s retail market continues to be fuelled by strong demand. It adds: “With so many overseas retailers entering the Irish market for the first time, good economic performance and low interest rates, consumer spending has increased. And shopping centres, in particular, are performing well.”
Retail sales continue to grow by 6% month on month – the highest growth in Europe. It is figures such as these that are encouraging both foreign retailers to open in Ireland, and home-grown retailers to expand.
In fact, for every incoming foreign brands, a local one is expanding. US retailer Borders is just one of the big names to have announced the opening of its first store in Dublin, and it has already got plans to take a further 10 shops. Gap and Abercrombie & Fitch are also said to be looking for shops.
Dunnes is one of the home-grown names that is expanding massively. The company is set to open at least five stores this year.
This is all good news. And some in the market do not see an end to the good times. Paul McDonnell, a director in corporate banking at the Bank of Ireland in Dublin, says there is continuing demand for floorspace. “We haven’t seen that fall off,” he says.
Sean O’Sullivan, general manager ofChieftain Construction, which is building Coonagh Cross, the €200m, 21,760m2shopping centre outside Limerick (see box), echoes McDonnell’s words. He says his company is confident that there is still a strong demand for shops from international tenants.
Added to this is the Special Savings Incentive Account (SSIA) – a savings scheme set up five years ago, where the government gives investor €1 for every €4 they save. Last week, 41,000 Irish people who signed up to the scheme were told they would receive almost €14,000 each. It is expected that this money will be spent in the retail sector.
“The SSIA’s will really buoy up the economy for the next couple of years at least,” says Hugh Markey, a director with Lisney’s in Dublin.
Continuing boom
But some commentators are starting to get jittery about the continuing boom. Stories have started to appear in the Irish press in recent weeks with Armageddonesque headlines such as “Growth threatens to spiral out of control”. Debt is growing, as is inflation, and borrowers are being warned to be cautious.
Even bullish commentators, such as McDonnell, are prepared to admit that “there’s probably some economic questions about consumer spending”.
And there is already evidence of over-heating in the retail warehousing market. Growing competition, increasing rents, and continuing developer interest has resulted in the market reaching near saturation levels.
But, for the moment, the cautious voices are remaining just that, voices. Developers and agents are happy with the amount of building that is either taking place or planned across the country, especially in the shopping centre market. For them, it is a matter of letting the good times roll, and hoping that nothing blocks the progress.
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Figures from CB Richard Ellis show that, by year-end, there will be more than 1m m2 of shopping centre floorspace in the Republic of Ireland, and almost 500,000m2 of retail warehouse accommodation ● Developer Chieftain Construction was given planning permission last month to build a €200m, 21,760m2 retail, leisure and entertainment development. Called Coonagh Cross, the development is just outside Limerick city, County Limerick and is scheduled to open in the latter half of 2007. ● Dunnes Stores will anchor Beacon South Quarter in Sandyford, south west Dublin, now under construction. The project, which will have 18,000m2 of shops, is scheduled for completion next year. ● Last month Bee Bee Developments resubmitted substantially reduced plans for a £350m mixed-use scheme in Dublin. The developer’s plans now include 10,000m2 of retail space, 2,000m2 of offices and 484 homes. ● Citywest Shopping Centre, Dublin, being developed by Davey Hicks Properties, will have 14,000m2 of shops. Dunnes Stores is the anchor tenant. |
