For the retail leasing world, 2023 has started with the proverbial 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-19 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. Here at Savills, there were a total of 42 shops available to lease, amounting to an overall footprint of about 435,000sq ft, the size of a large shopping centre. Grafton Street had 24 shops available, while Henry Street had 18, albeit accounting for 70 per cent of the available floor space 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 seven vacant shops, almost all of which are small shops of less than 1,000sq ft.
While the market deal-count was much lower in Dublin 1, Savills have handled a number of “anchor” deals which have provided a catalyst for improved market confidence. This summer will see the opening of the flagship H&M and Flannels stores at Clerys Quarter on O’Connell Street, and Tessuti’s first Irish store in the Jervis Centre. These openings will be topped off by the arrival of Sports Direct, which plans to transform the long-vacant ex-Debenhams flagship on Henry Street into its marquee Irish store.
These deals have been followed up by a significant amount of leasing activity on Henry Street since the start of 2023. As an indicator, Savills 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 are complete, we calculate that by the end of the second quarter, Henry Street will have just three vacant shops, totalling 4,500sq ft of trading space. By any measure this is an incredible turnaround.
The most recent high-profile deals on the street are Foot Locker taking the former H&M store in the Ilac Centre, Dubray Books is currently fitting-out the former Dealz store on Mary Street, and Levi’s is planning to open their flagship Irish store in the ex-Evans unit at the corner of Henry/Moore Street.
Exploring occupier trends, there is a difference in the profile and approach of retailers targeting space on Grafton versus Henry Street. Grafton Street has proved itself to be a target for international retailers pursuing an omnichannel 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 boutiques that have just opened at Hines’ Chatham & King scheme on Chatham Street, and the opening of the British luxury handbag maker Mulberry’s new store on Duke Street.
There are two clear drivers for retailers seeking space on Henry Street. The first of these drivers is street fashion, and the halo effect of JD Sports. 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. Along with Penneys, it has 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 Street 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 the €180 per sq ft that prevailed in the depths of Covid-19, 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 that are due to open in the next 18 months will surely improve footfall, helping generate opportunities for stronger revenues for all retailers, which in turn should encourage further demand from new occupiers. This phase of the street’s recovery should hopefully act as a well-timed springboard for Hammerson’s vital Dublin Central project, which aims to start construction in 2024, and plans to include a Metro station among its 800,000sq ft of mixed uses.
The long-awaited recovery of retail in Dublin 1 is well and truly under way.
Kevin Sweeney is director of retail at Savills Ireland