Concerns about rising unemployment, a stagnant housing market and less favourable economic prospects are starting to impact on consumer spending patterns in Ireland, says CB Richard Ellis.
In its latest Irish Retail Market View for the first quarter it said some retailers had started reporting tougher trading conditions in recent weeks. It said although demand remained robust compared to other European countries in light of the slower retail sales growth there was a potential oversupply looming in the country.
By the end of this year CBRE predicts that there will be more than 20m sq ft of shopping centre retail space available with a further 2.7m sq ft of retail space by the end of 2009. There will also be more than 13m sq ft of retail park space by the end of the year and a further 1.3m sq ft by 2009.
It said: ‘In the unlikely event that all of the retail schemes being proposed around the country were to achieve planning permission and subsequently be developed, oversupply would be inevitable and some locations in Ireland would be exposed. This in turn would have a negative impact on rental and capital values.’
CBRE said reports of weaker consumer spending had been borne out by its latest pedestrian footfall analysis on prime shopping streets which showed there were 12,000 shoppers an hour on Dublin’s main shopping street Grafton in the first quarter – a 12% decline on the five year average. While Henry Street had a 9% decline on the five year average with 11,000 shoppers an hour.
However, it said the supply of new space had eased in the last two years and the scarcity of development finance would hinder further speculative development but going forward the supply of new retail schemes would be ‘now crucial’.
CBRE also reported that retail yields have moved out with prime high street properties in Dublin yielding 2.75% and shopping centres around 4%.