For the first time since 2007, all indicators are now pointing to a stabilisation in retail conditions. This is according to property consultants, Savills Ireland. In its latest commentary on the retail property market, Savills notes that personal consumption expenditure, retail sales and VAT receipts all appear to have stabilised and are now beginning to show improvement.  

Economist and Director of Research at Savills Ireland Dr. John McCartney attributes this to a strong recovery in the labour market;

“Employment has risen by over 3% in the last year – a remarkable growth rate by international standards – and the private sector is creating almost 5,000 new jobs per month.  This is feeding through to improved consumer confidence and is beginning to be seen at the tills”.

McCartney continued; “The consumer sentiment index has risen by over 60% in the last 12 months and is now at its highest point since June 2007. Reflecting this, the household savings ratio has halved since its peak in 2009 and, at 8.4%, is currently well below the EU average. While consumers are undoubtedly still cautious, this does now appear to be contributing to stronger retail sales, with overall turnover up 1.6% in the year to November.”

However, although overall market conditions are beginning to improve, Savills warns that the recovery is not uniform across all regions and store types.  

“Disposable incomes per person are up to 20% higher in Dublin than in other regions of the country. This is leading to the emergence of a two tier market with most retail activity concentrated on prime high streets and shopping centres in Dublin. In contrast, vacancy rates remain elevated in some provincial towns across the country.”

Bernadine Hogan, Divisional Director of Retail at Savills Ireland, notes that consumer electronics and footwear & fashion retailers are currently among the most active in the market. In addition, there is also demand arising from the food & beverage sector;

“We are now seeing increased demand from food and drink retailers for prime city centre space, with requirements currently outstripping the available stock”.

Savills expects prime retail rents to stabilise, and grow in some locations, during 2014. However, this trend will not extend to secondary locations where rents will continue to soften and further tenant incentives will be offered as an inducement to take space.

The full report can be viewed here – http://bit.ly/1e0Eaja