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ANALYSIS the commercial property sector, if anticipated Brexit-related relocations from London materialise as we expect they will in 2017”. It was a strong year for the Irish property market according to the report, with 223 investment transactions of greater than €1m completed in 2016, totalling an accumulative sum of over €4.5bn. Of this amount, half was spent in the retail property sector, with €1.5bn of the total generated by the sales of Blanchardstown Town Centre and Liffey Valley shopping centres in West Dublin alone. “Activity [was brisk] in the retail sector of the economy in 2016 with many retailers expanding their presence and several new entrants emerging,” Luddy continues. “Many of the better retail schemes and high streets are now almost at full occupancy.” The report highlights reduced levels of vacancy, high levels of activity in capital city, Dublin, and a particularly strong demand from food and beverage operators in shopping centre locations. New brands to the Irish retail marketplace in 2016 included: & Other Stories, New Balance, Le Pan Quotidien, Under Armour, The Works, The Range, Five Guys, Zizzi, Xti, Prezzo and Cosmo. Brands expected to launch their first Irish stores in 2017 include lingerie specialist, Victoria’s Secret, which is due to open its new Dublin flagship store in early summer, Urban Decay, Smiggle, Homesense, Benson for Beds and Nisbets. CBRE expects prime rents will continue to rise throughout 2017, with four per cent growth in prime shopping centre rents and almost eight per cent growth for Dublin high streets projected for the coming year. The company also anticipates leases of 10 years duration to become more prevalent in many prime locations, but leases in provincial locations to continue to be more incentivised. Schemes due for completion in 2017 include an extension to the Eyre Square shopping centre in Galway, a new development at Grand Parade in Cork, and an extension to the City Square development in Waterford. Retail schemes expected to go on site in 2017 include an extension to Frascati shopping centre in Blackrock in south Dublin [pictured] and the redevelopment of Clery’s department store in Dublin city centre. CBRE asserts in its report that the incorporation of entertainment and leisure into the retail experience will continue to evolve as Irish shoppers increasingly switch back and forth between physical and virtual channels. The company expects to see heightened collaboration between landlords and retailers in an effort to improve dwell times, footfall and spend within their schemes. In slight contrast to their positive projections for a continued interest from investors, CBRE predicts the overall volume of spend in this sector and retails’ proportion of overall investment spend is expected to ease in 2017 following the trophy shopping centres that changed hands last year. SHOPPING CENTRE MARCH 2017

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In its Market in Minutes: Retail Ireland report, Savills echoes the positive outlook put forward by CBRE, stating however that GDP projections indicate there will be slowdown of market growth of around 3.4 per cent in 2017, and continued expansion of 3.1 per cent in 2018. “While the retail economy dashboard continues to tell a positive story, recent data hints at something of a decoupling between macro indicators and consumer specific measures,” the report states. “The retail sales index, for example, has risen by 29.3 per cent since its trough in January 2010. Consequently today’s sales increases are naturally translating into smaller-andsmaller percentage rises.” Savills’ report claims political turbulence due to Brexit and the delay in forming Ireland's own Government may have adversely impacted on the consumer mood, but that this should remain short-lived. “Given the continuing strength of the underlying macroeconomy and the favourable macro-economic forecasts, our view is that any headwind from this source is likely to be temporary. We also note that, in our econometric modelling, the impact of jobs growth on retail rents dominates the impact of movements in the consumer sentiment index by a ratio of more than 10:1.” The report echoes CBRE’s claims of the importance of the food and beverage sector, saying that it demonstrates the growing synergy between fashion shopping and casual dining which has become something of a defensive mechanism for shopping malls against the ongoing threat from online retailers. Savills claims that as the overall number of shoppers is rising, footfall in the food court areas of some of the malls that it manages is rising at twice the overall rate. According to Savills, retailer demand for occupational space should remain strong as the jobs market continues to out-perform. It highlights that rental growth has been slower, with the MSCI overall retail rents index currently rising at 7.2 per cent per annum. Its forecasting model predicts that this will gently ease over the next two years, but further rental growth of about 7 per cent is expected by mid-2018. Marie Hunt, executive director and head of research at CBRE Ireland, gives a hopeful outlook for the coming year. “Regardless of the economic or political backdrop, returns from Irish commercial real estate have been slowing for some time now following the extraordinary growth experienced in 2014 and 2015. This easing is expected to continue in 2017, particularly considering the unexpected tax changes announced in Budget 2017, which are likely to impact negatively on pricing this year. “Although the pace of rental inflation has eased, good rental growth is still forecasted to be achieved in some sectors of the market this year. Indeed, rental growth in all sectors in Dublin is forecast to be considerably higher than the European average in 2017.”

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Shopping Centre Magazine March 2017  
Shopping Centre Magazine March 2017