Ireland

Ireland As the Irish economy experiences robust growth once more, Retail conditions in Ireland have improved significantly. This is evident by rising retail sales figures, which in volume terms, have increased by approximately 22% over the past four years.

2016 proved to be a year of two halves for retail sales, as growth slowed in the latter half. The depreciation in the value of the pound sterling against the euro intensified competition for cross-border shopping and UK based online retailers. However, strong consumer sentiment readings for January 2017, combined with very positive labour market data and domestic demand, signal positive consumer spending growth ahead.

ECONOMIC SUMMARY
ECONOMIC INDICATORS*2016E2017F2018F2019F2020F
GDP Growth 4.12.62.52.22.3
Private Consumption Growth 2.73.02.62.52.5
Industrial Production -0.6-0.11.31.41.5
Investment3.12.94.72.83.0
Unemployment rate (%)7.17.06.46.15.8
Inflation0.01.31.81.71.7
US$/€ (average) 1.11.01.01.01.1
Interest Rates Short Term (%) -0.3-0.3-0.3-0.30.0
Interest rates 10-year (%) 0.71.11.41.72.1

Note: *annual % growth rate unless otherwise indicated. E estimate F forecast
Source: Oxford Economics Ltd. and Consensus Economics Inc

ECONOMIC BREAKDOWN
Population4.8 million (2016)
GDPUS$238 billion (2015)
Public sector balance -2.3% of GDP (2015)
Parliament Coalition: Fine Gael, Independents
Head of StateMichael D. Higgins
Prime MinisterEnda Kenny
Election date 2018 (Presidential)
RETAIL SALES GROWTH:
% CHANGE ON PREVIOUS YEAR
IRELAND20162017F2018F2019F2020F
Retail Volume3.44.13.53.43.3
Retail Value1.24.85.14.84.7

Source: Retail Sales, Central Statistics Office (CSO), Ireland

LARGEST CITIES
CITYPOPULATION
Dublin553,165
Cork125,622
Galway79,504
Limerick58,319
Waterford48,369
Source: CSO, 2016 Preliminary Census Results

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Cushman & Wakefield, Inc. - Ireland

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Dublin: 53.349443, -6.260082
St. Cork: 51.832502, -8.323216
Galway: 53.270559, -9.056668
Limerick: 52.668020, -8.630498
Waterford: 52.252729, -7.125608


MAJOR DOMESTIC FOOD RETAILERS

Musgraves (Super Valu, Centra), Dunnes Stores, BWG Group (Spar, Eurospar, Londis)

MAJOR INTERNATIONAL FOOD RETAILERS

Tesco, Aldi, Lidl, M&S

MAJOR DOMESTIC NON-FOOD RETAILERS

Dunnes Stores, Penneys, Eason, Avoca, Meadows & Byrne, Heatons (recently acquired by Sports Direct), Brown Thomas and Arnotts (both recently acquired by Selfridges but still trade as BTs and Arnotts) Elvery Sports

INTERNATIONAL RETAILERS IN IRELAND

Debenhams, TK Maxx, Inditex Group (Massimo Dutti, Zara, Bershka, Pull & Bear, Stradivarius), H&M Group (& Other Stories, H&M, Cos), Arcadia Group (Topshop, Top Man, Evans, Dorothy Perkins, Burton, Wallis, Miss Selfridge.), Bestseller Group (Jack & Jones, Vila, Name It, Vero Moda, Selected), Next, Marks & Spencer, Abercrombie & Fitch, Hollister, Ted Baker, Disney, Boots, JD Sports

FOOD & BEVERAGE OPERATORS

Starbucks, Costa Coffee, Caffe Nero, Insomnia, McDonalds, Burger King, KFC, Eddie Rockets, Wagamama, Supermacs, Carluccios, Milano, Nandos, Zizzi, Prezzo, The Counter, GBK, TGI’s, Five Guys

TYPICAL HOURS
MONDAY-FRIDAYSATURDAYSUNDAY
09.00-18.00 (Thursdays until 21.00)09.00-18.0012.00-18.00
09.00-21.00 (prime: Blanch & Dundrum)09.00-19.0010.00-18.00

The Irish retail market is relatively small when compared with other European countries. Ireland is a mature and competitive retail market and has witnessed significant changes in the past 15 years, with international retailers gaining strong footholds throughout the country at the turn of the century, expansion was stagnant in the downturn with a return of retailers expanding on the horizon.

Total existing stock of shopping centre (over 5,000sq.m) space in Ireland totaled over 2 million sqm GLA as at Jan. 1, 2017. Retail Development was stagnant since 2011 and for the first time in 6 years, there is now a retail development pipeline of over 5080sq.m. The predominant delivery is through extensions of existing centres, with only one new Shopping Centre in development, Cherrywood Town Centre. With such limited availability over recent years and retailers moving to larger format stores the increase in accommodation will be in demand.

The Irish retail warehousing market is the last retail quadrant to recover, we are beginning to see this recovering, albeit slow. New entrants such as Benson for Beds and Homesense have entered the market in the past 12 months and some strong domestic retailers such as Homestore & More, Michael Murphy and EZ Living are all in expansion mode. As the demand for residential development continues, we will see continued recovery. Where development took place of Retail Warehousing in secondary locations, alternative uses are being considered, however this is localized and does not represent the entire market.

There are no restrictions on foreign companies either buying or renting property in Ireland. It is generally believed that the traditional Irish lease structure is more orientated toward landlord than tenant; however the nature of leases is changing. While upwards only rent review clauses still exist in legacy leases (pre-February 2010), such clauses are now legally prohibited in all new leases. The length of leases has typically become 10 years shorter. Break options will depend on the location and relative strength of the parties and are seen typically at year 5 and 7.

Although it is possible to occupy a new building within a few weeks, it is more realistic to expect that on average it will take 6-9 months from initialising the property search to taking occupation of an existing property. This includes time for considering location options, the identification of buildings or sites, negotiating leasehold or freehold terms and drafting of the appropriate legal documentation.

NEW ENTRANTS
RETAILERS
Mint Velvet& Other StoriesVictoria’s SecretXtiAeropostale
ZizziPrezzoCosmoFive GuysSostrene Grene

TOP SHOPPING CENTERS BY SIZE
NAMECITYSIZE (GLA SQM) YEAR OPENED
Blanchardstown Town Centre (SC& RP)Dublin120,7441996
Dundrum Town CentreDublin120,0002005
Liffey Valley Shopping CentreDublin71,0001998
The Square Town Centre, TallaghtDublin53,0001990
The Pavilions Shopping Centre, SwordsDublin41,0002001
Crescent Shopping Centre, LimerickLimerick33,1541973
Whitewater Shopping Centre, NewbridgeNewbridge Mid East32,0002007
Jervis Centre, Dublin 1Dublin30,4161996
Ilac Centre, Dublin 1Dublin28,8431981
The Marshes, Dundalk, Co LouthDundalk Border25,1732005

KEY FEATURES OF LEASE
ITEMCOMMENT
Lease TermsTraditionally, Irish leases were taken for a term of 20/25years and could be up to 35 yrs in certain locations (e.g. for an anchor tenant). Leases are now typically taken for 10-15 years. Break options at years 5 and 7 commonplace, particularly in regional locations, however, 10 years term certain would be required to secure prime locations such as Grafton Street and Dundrum Town Centre.
Rental PaymentRents are typically payable quarterly in advance, however, monthly rental payments can be negotiated. Base and turnover rents will be considered by some landlords for established retail brands in order to achieve optimum tenant mix however turnover only deals are quite rare. Security deposits equivalent to 3-6 months’ rent and/or parent company guarantees are required for new companies / weak covenants.
Rent ReviewRent reviews are generally to open market rent. For the majority of leases entered into prior to February 2010, rents cannot fall below passing levels, even if the market rate is lower. For leases that commenced after this date, or at lease expiry, rents are permitted to fall to the market rate. Indexation is not common practice but is being seen on an increasing basis, together with fixed uplifts.
Service Charges, Repairs and Insurance A service charge is usually payable in multi-tenanted buildings and covers management fees, security, cleaning, landscaping, internal maintenance of common parts, external maintenance and insurance, servicing of elevators, water, heating, air conditioning, management fees and property taxes. It excludes internal maintenance and insurance of rented accommodation, utility charges and VAT. The landlord is responsible for external /structural matters in shopping centres (charged back via service charge) or tenant (except in multi-let buildings). The tenant is responsible for internal matters. The landlord usually insures the main structure and external fabric but will charge this back to the tenant. Insurance for common parts is also paid by the landlord and charged back. The tenant usually pays for internal insurance directly.
Property Taxes and other costs The local government authority charge "commercial rates," the local property tax, which is payable on commercial property. A new rate is struck each year and this is applied to the rateable valuation of the property. Generally, rates will amount to approximately 20% of the rental but this varies.
Disposal of a LeaseSub-letting / assignment is usually permitted under the terms of the lease, subject to landlord’s consent which cannot be unreasonably withheld. Early termination is only by break clause, to be negotiated at outset of lease by mutual consent. At lease end, the tenant is responsible for re-instating the premises to the same condition as at the start of the lease, subject to normal wear and tear. All tenant improvements must be approved by the landlord, subject to the alteration covenant in the lease, approval should not be unreasonably withheld.
Valuation MethodsPrime High Street and M50 schemes rents are calculated on a 'zoning' basis. The retail zoning principle recognises that the area at the front of the shop, adjacent to its primary window frontage (normally referred to as “Zone A”) is the most valuable in rental terms. The rate per square foot halves back through regular depths (i.e. the first three zones of 20 ft / 6.1m each) towards the rear of the ground floor, with “Zone B” valued at A/2, “Zone C” at A/4, “Zone D” at A/8 and a “Remainder” zone, typically valued at A/12. Upper and lower sales floors are similarly valued as a proportion of the “Zone A” rate, with basement and/or first floor sales accommodation typically taken at A/10, and ancillary at A/20.
LegislationLandlord and Tenant Act, 1980 (as amended) and subsequent acts. Leases must be in writing and the lease document forms the standard documentation required. A mandatory standard form of lease does not exist although a market standard is in place.


Ireland Contacts

Karl Stewart


MSCSI MRICS
Director, Retail
Direct: +353 1 639 9347
Office: +353 1 639 9300
Mobile: +353 86 839 5936