After the pandemic: in Dublin’s bare city
After the pandemic: in Dublin’s bare city. Our streets must be reimagined to entice visitors rather than cater to workers. Bannon advises on this in The Sunday Times.
After the pandemic: in Dublin’s bare city. Our streets must be reimagined to entice visitors rather than cater to workers. Bannon advises on this in The Sunday Times.
The dramatic improvement in the balance sheets of Irish Consumers in the last decade is astounding, savings are up 35% and debt is down 33%, a €70bn nett turnaround. The potential for a positive impact on the retail sector post reopening is clear, the question is where will the money be spent. We are modelling the potential impact on the different retail sub-sectors and expect to see a very different outturn to the 2013 recovery.
With the rollout of Covid-19 vaccines now under way, the owners of Blanchardstown Centre are gearing up for the return of significant numbers of shoppers to its stores, with three additions to the west Dublin outlet’s food and beverage line-up.
Having played host in 2018 to US donut giant Krispy Kreme’s most-successful opening globally, Blanchardstown has added boutique coffee house The Art of Coffee and specialist donut brand Off Beat to its offering. They will be joined later this year by gourmet burger chain Bunsen.
The Art of Coffee’s unit is its first in a shopping centre and is located at the red mall entrance beside BT2. The new 65sq m (700sq ft) store was added as part of the same development that saw German supermarket chain Aldi open a new 2,200sq m (23,680sq ft) store last December. Off Beat’s new store is located near Dunnes Stores in the green mall.
Bunsen’s new restaurant will be located immediately next door to Krispy Kreme. Extending to 190sq m (2,045sq ft), it will represent the popular chain’s first foray into a shopping centre since its establishment in 2013.
Commenting on the decision of the three brands to locate at Blanchardstown Centre, Sharon Walsh, leasing director at Falcon AM, said: “All three brands are best in class and Irish-owned. We are delighted that when they looked at growing their businesses in these challenging times, Blanchardstown was their destination of choice. These new additions will appeal to a broad demographic and enhance and compliment the already-wide food and beverage offering at Ireland’s largest shopping and leisure location.”
BNP Paribas and Bannon are the joint leasing agents at Blanchardstown Centre.
Are you interested in the history of some of Dublin’s past and present retailers?
Well, the Central Library are hosting a new series by Dublin City Council Historian in Residence Dr Mary Muldowney which takes a look at retail streets like Henry Street and how they have changed over the last 100 years or so. The series features Dublin favourites Arnotts, Clerys, Roches Stores and other major retailers that have disappeared; as well as featuring the small businesses.
In her opening talk on 8 February, Mary introduced us to the history of retail in Dublin City Centre.
The next talk, Shopping in Dublin City Centre 1790-1990. Henry Street and the women who worked there is on 8 March at 7pm.
This lecture will take place on Zoom and, in honour of International Women’s Day on 8th March, it will focus on the women who ran and worked in the many retail businesses on Henry Street.
Despite the challenges facing the north-east this year due to impending Brexit and stricter lockdowns than their counterparts on either side of the border, it’s great to have some positive news and see Harry Corry open their latest store in Cavan Retail Park. Harry Corry are an international retailer specialising in home furnishings and this letting brings the park to full occupancy, further re-affirming the resilience of the retail park market.
It’s difficult to imagine things getting any worse for the retail sector than they did in 2020. But the chief driving force behind the decline of investor interest began long before Covid-19 arrived. There has been growing concern in relation to the impact of online retail and changing consumer trends on the long-term supply-demand dynamic for the bricks-and-mortar format. Much of this has been imported from the US where retail supply is five times that of Ireland, and the UK where it is 25 per cent higher and undergoing a sustainability crisis.
While the relative performances of these markets may already have been up for debate, the impact of Covid has ended the discussion. By mid-March the sector became virtually un-investable due to Covid-related uncertainties attaching to rental payments being added to those longer-term occupational concerns. The consequence of this is manifest in year-end investment turnover figures where retail will represent a record low 2.5 per cent of an anticipated total investment market turnover of € 3 billion. This from a sector that represented 24 per cent of investment turnover for the last decade (to 2019), but descending rapidly from a high of 53 per cent in 2016 to a previous record low in 2019 of 9 per cent.
Unsurprisingly for 2020 High Street retail has been worst affected with Grafton Street top of the list experiencing a 66 per cent reduction in footfall for March to October. While the street’s footfall figures had been holding steady at 25 million for the last two years, the 2020 outcome will be closer to 13 million.
No surprise then that almost a quarter of the units on the street are effectively available. Henry Street performed a little better as did some of the other city’s high streets, but the tone is similar. Next in line were the “comparison led” shopping centres which, as a general rule, saw footfall collapse during the first lockdown and rent collections plummet below 35 per cent. However, they did improve quickly and were less affected by the second lockdown. The burden of the service charge costs of running these mall-based schemes was exposed during these periods and will be a key factor in assessing the risk of ownership of these asset types in the future.
The resilience of the grocery sector shone through. No surprise therefore that 65 per cent of the limited 2020 retail investment transactions were grocery deals. Similarly, smaller grocery-led schemes performed better and recovered quicker than major town centres but weaker covenant strength and holding costs affected net rental collections.
Low holding costs
The retail sector’s star performers, however, have been the retail parks. Indeed, in the case of the 15 retail parks under Bannon management (between nationwide lockdowns) car throughput actually increased year on year for the period with rent collection rates approaching 100 per cent and impressive turnover increases. Even where tenants were adversely affected, low holding costs relative to shopping centres maximised the net income return to landlords.
If this crisis has accelerated the sector’s movement to the “retail endgame”, then retail parks and their occupiers have risen to the challenge. In this regard we envisage this asset type, along with grocery, to be the most liquid and popular sector for the year ahead.
Outside of this and following both Brexit and an anticipated mid-January lockdown we foresee a post-vaccine period of rebuilding balance sheets and filling occupational voids. While this period could take 12 to 24 months, there is little doubt that the rebasing of the sector generally will attract new investors wishing to get ahead of the recovery. This will probably manifest as loan trades first with a focus on fundamentally-sustainable schemes and high streets at attractive yields with occupiers who have embraced the omnichannel experience.
More sophisticated investors will recognise the buying opportunity that Covid-19 presents, especially if valuers fail to acknowledge the vast differences in performance across the sector.
Rod Nowlan is investment director at Bannon
Gateway Shopping Park will soon have an exciting and state of the art gym opening. The Warehouse Gym has just signed a lease with the shopping park and is due to open in the second quarter of 2021. It will be one of the biggest gyms in the west of Ireland at 18,000 sq. ft and it will be their third location in Galway.
The Warehouse Gym was founded in County Galway in 2013 and has exploded in popularity due to its large selection of strength equipment, free weights, machines and cardio equipment. As their community grew, they expanded out of the city centre to Oranmore in the outskirts of Galway, where they continue to serve their loyal members. The new gym in Gateway Shopping Park will host Galway’s largest selection of free weights, squat racks, cardio equipment and resistance machines. Services offered include personal training, InBody scans, virtual coaching software and nutritional consultations which are all bookable through a mobile application.
Michael Shortall, the General Manager of The Warehouse Gym, said “As a local business, The Warehouse Gym is super excited to be opening the largest gym in the west of Ireland right here in the heart of Galway. Gateway Shopping Park is the perfect location for serving the health and fitness needs of the Knocknacarra and surrounding communities. It’s our mission to fulfil that need by providing a welcoming, clean and modern health club for all ages and interests.”
Sigma Retail Partners are the asset management company for Gateway Shopping Park. Paddy O’Connor, Asset Manager for the park, said: “Finding the right fitness offering for our park was a key strategy for us. We wanted to ensure that we selected the right gym operator to provide the local community and the surrounding areas with a state of the art and well-run fitness centre. We are so pleased that a well-established gym in Galway will be joining our newly extended shopping park. The Warehouse Gym will be the eighth new addition to the Phase 2 extension and we look forward to welcoming them into our shopping park next year.”
The new shopping park extension is the first provision of retail space outside of Dublin since 2008 and the first in Galway in more than two decades. The development provided over 150 jobs during construction phase and is expected to create over 300 jobs in Knocknacarra and Galway when fully occupied. It will have open-use retail units and food and beverage units.
Gateway Shopping Park already has an impressive line-up of retailers including Dunnes Stores, B&Q, New Look, Next and McSharry Pharmacy, with new tenants recently opened in the Phase 2 extension, Harvey Norman, Boots, Carraig Donn, Petstop and Sonas Childcare. With the inclusion of The Warehouse Gym, the Phase 2 extension will be over 90% let.
Bannon are delighted to welcome Bag City to Marshes Shopping Centre, Dundalk in the lead up to Christmas despite a turbulent 2020. Jennifer Mulholland, Divisional Director, comments that the addition of Bag City to the Tenant mix at Marshes is another positive testament for the scheme which continues to be the North East’s most dominant retail scheme.
Great to welcome Name It to The Square Town Centre, Tallaght! Fantastic news to start off the Christmas season.
As we exit level 5 restrictions, there is cause for double celebrations yesterday in Swords Pavilions Shopping Centre with the opening of 2 new stores. Great to see both Golden Discs & Catch open their doors in the lead up to Christmas.
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