The latest retail sales data from the CSO is one of a number of indicators pointing to a sustained recovery in the sector which, in turn, is driving up retail property rents, according to a new report from property consultants, Savills Ireland.

However, according to Dr. John McCartney, Economist and Director of Research at Savills Ireland, jobs growth is the single most important factor in driving consumer demand and ultimately, retail rents; 

“Currently almost every dial on the consumer economy dashboard is pointing in a positive direction.  However, a recent study carried out by Savills and the ESRI, found that over the last 18 years employment has been by far the most important factor in driving retail rents - a 1% increase in jobs growth brings about a 0.85% rise in rental growth 15 months later. Given that the ESRI is currently forecasting 50,000 additional jobs in 2015 and a further 55,000 next year, this clearly augurs well for strengthening growth in retail rents.”

Elsewhere in the report, Savills says it expects retail rents to rise most strongly in prime high street locations and the better suburban shopping centres. Current Zone A headline rents on Grafton Street are in the region of €5,600 – €5,900 per sq m.  However, reflecting improved trading conditions and the strength of demand, Savills believes they could reach €6,450 per sq. m. by the end of this year. 

Outside of Dublin, activity in some of the stronger regional locations is also beginning to improve. Larry Brennan, Head of Commercial at Savills Ireland, commented:

“Demand from both local and international retailers in the stronger regional towns and shopping centres has increased significantly over the past 12 months. This has led to a move from turnover rents to base rents, which is very a positive sign. Competitive bidding for good retail units in these locations should translate into rental growth going forward. However, in the more remote regional locations, it is a mixed picture with some schemes remaining under pressure.”