Retail property rents are set to rise by 7%-10% over the next two years despite entering a phase of lower growth, according to a new report by property consultants Savills Ireland.
The research identifies a softening in some short-term rate indicators such as retail sales, VAT receipts and consumer sentiment over the last year.
However, the study suggests this is attributable to “the temporary impact of political uncertainty on consumer confidence” as opposed to reflecting underlying weakness in the economy.
The research shows employment is by far the strongest long-term indicator of retail rents, and expects retail rents to continue rising after jobs growth of 2.9% in the last year.
Savills’ econometric model forecasts rental growth of just below 10% on Grafton St by the second quarter of 2018, while in less prime markets it expects rents to rise by around 7%.
Director of Research at Savills Ireland Dr John McCartney said rents in “some prime shopping locations have already risen by more than a third over the last three years.
“As the retail economy transitions from its early recovery phase to a sustainable growth phase, base effects are inevitably going to dampen the annual percentage increase in rents.”
The company added that demand from international retailers here remains strong, with upcoming openings of ‘& Other Stories’ and ‘Victoria Secret’ on Grafton St, as well as the new Top Shop flagship store in Jervis Shopping Centre.
Meanwhile, smaller premium fashion and speciality stores are in large demand in the Dublin 2 area, while food lettings are also continuing throughout Dublin City centre.
