For the retail leasing world, 2023 has started with a bang on Henry Street. In what is a significant trend for the market, Dublin 1 has finally caught up with the Grafton Street area in terms of take-up of vacant shops. As we emerged from the depths of Covid lockdowns, Grafton Street grabbed all the headlines for new brands, while Henry Street was flat, with little or no activity. Thankfully, that is all about to change.
The low-point for vacant city centre retail was two years ago, in Spring 2021, deep in the third and longest lockdown. The recovery since then has been phenomenal. Two years ago, there were unprecedented numbers of vacant or available shops on our two prime high streets. We counted a total of 42 shops available to lease, amounting to around 435,000 sq.ft., the size of a large shopping centre. Grafton Street had 24 shops available, while Henry Street had 18, albeit accounting for 70% of available floorspace due to the vacant Debenhams department store.
Grafton Street recovered very quickly, with global brands such as Lego, Canada Goose, Lululemon and Skechers securing key sites. Today, Grafton Street has 7 vacant shops, almost all of which are small shops of less than 1,000 sq.ft.
While the market deal-count was much lower in Dublin 1, we handled a number of ‘anchor’ deals which provided a catalyst for improved market confidence. This summer will see the opening of the flagship H&M and Flannels stores in Clerys, and Tessuti’s first Irish store in the Jervis Centre. These openings will be topped-off by the Sports Direct Group, who plan to transform the long-vacant ex-Debenhams into their marquee Irish store.
These deals have been followed up by a remarkable amount of leasing activity on Henry Street since the start of 2023. As an indicator, we had six shops available to lease at the start of this year. All of these are now either signed or in advanced negotiations. Assuming these deals complete, we calculate that by the end of Q2, Henry Street will have 3 vacant shops, totalling 4,500 sq.ft. of trading space. By any measure this is an incredible turnaround.
The most high-profile recent deals on the street are Foot Locker taking the ex-H&M store in Ilac Centre, Dubray Books currently fitting-out the ex-Dealz store on Mary Street, and Levi’s planning to open their flagship Irish store in the ex-Evans store at the corner of Henry/Moore Street.
Exploring occupier trends, I believe there is a difference in profile and approach of retailers targeting space on Grafton versus Henry Street. Grafton Street has proved a target for international retailers’ omni-channel strategy, opening a store in Dublin to capitalise on (Covid-influenced) strong online sales. The Grafton quarter has shown recently that it can also attract luxury brands, such as the luxury watch brands just opened on Chatham Street, and Mulberry on South Anne Street.
I believe there are two clear drivers for retailers seeking space on Henry Street. The first is about street-fashion, and the halo-effect of JD. In my view, the arrival of the large JD store in the Jervis Centre in 2018 changed the dynamics of the street. By all accounts it is one of the best-performing JD stores in the world. Alongside Penneys, it changed the shopper-profile of the street, and shifted the centre of footfall gravity towards Mary Street. Retailers such as Foot Locker, Pull & Bear and Skechers are happy to trade within JD’s orbit, and others will be keen to follow. The second driver is Occupancy Ratio. We have experienced healthy demand from well-established Irish retailers seeking to improve their prime high street presence. Henry Street offers them the potential for a more profitable store than Grafton when costs are weighed against revenues. The assumption is that this ratio will improve when all these new stores are opened.
It is again a positive story on rents, with recent deals pushing the Zone A per sq.ft. rate into the €250 range, up from €180 in depths of Covid, and heading towards the pre-Covid figure of €275.
In summary, Dublin 1 retail looks to be entering a sustained positive cycle. The large number of new stores to open in the next 18-months will surely improve footfall, helping generate opportunities for stronger revenues for all retailers, which in-turn will drive new occupier demand. This phase of the street’s recovery should act as a well-timed springboard into Hammerson’s vital Dublin Central project, which aims to start construction in 2024, and plans to include a Metro station amongst its 800,000 sq.ft. of mixed uses.
The long-awaited recovery of retail in Dublin 1 is well and truly underway.