RESEARCH THE HENRY STREET REPORT TRENDS ANALYSIS OUTLOOK THE HENRY STREET REPORT RESEARCH SUMMARY HENRY STREET projected to rise by 2.5% in 2017 conscious Irish consumer, a behavioural With 1 GPO Buildings now let agreed, the spread over ground and upper ground 1. Growth in real incomes is Introduction according to the Economic and Social legacy of the recent recession. Whether only building available on a new lease is levels, a reduction of a third compared supporting an expansion in Situated in the north city centre, the retail Research Institute (ESRI). In the context this changes as real incomes grow 45 Henry Street, which is being marketed to its previous combined footprint. The consumer spending remains to be seen. The fall in the value thoroughfare known as Henry Street is of a 0.6% forecast for general inflation, at a rent of €3,660 psm. Regarding the new larger unit is the flagship store for its comprised of a single pedestrianised the growth in earnings will boost real of Sterling against the Euro since the shadow letting market, 52 Henry is let Topshop brand in Ireland, with the Zone 2. Prime Zone A Henry Street street bounded by O’Connell Street to incomes and thus consumer spending Brexit referendum is providing a further agreed while a new tenant is being sought A rent standing at €4,155 psm. The rents are now in the order of the east and Jervis Street to the west. power. Also, net migration returned to incentive for cross-border shopping. for 17 Henry Street. letting illustrates a preference for large €4,850 psm However, it should be noted for reference positive territory last year for the first time This, together with the continued rise of floorplates by high-end international purposes that Henry Street is technically since 2009, providing another layer of online retailing, will limit the scope for The Arcadia Group last year triggered retailers, unit configurations which are comprised of two separate streets, demand. This all supports increases in greater high street retail pricing power. co-terminus 20-year break options at its presently in short supply in Dublin City 3. Competition between namely Henry Street and Mary Street, consumer confidence, which is almost five stores in the Jervis Shopping Centre. Centre. A further example of this demand institutional investors for prime with the demarcation between the two back at the ten-year high level achieved The retailer has dropped its Wallace, Miss was TK Maxx’s letting of 3,250 sq m at retail assets in Dublin has Letting occurring at Liffey Street. Recording an in early 2016, before the uncertainty Selfridge and Burton stores, replacing them the Ilac Centre in 2014, where they pay benefited Henry Street annual footfall of 30 million, the street has surrounding the Brexit referendum forced An early marker of Henry Street’s rental with one large unit extending to 1,858 sq m an annual rent of €550,000 per annum. arguably the best retail offering in Dublin a retreat. These trends have seen total recovery was Mango’s letting in Q1 2014 4. Prime yields currently stand due to the combination of high street private consumption rise by over 10% of 1,797 sq m at 46-47 Henry Street at a Zone A rent of 3,444 psm. At the time, at 3.75% shops, department stores and two in the past three years to now exceed € FIGURE 2 shopping centres all in close proximity. pre-crisis levels, although on a per capita the deal represented an important Prime Henry Street Zone A Rents Prominent occupiers include Arnotts, basis they remain slightly below, endorsement of the street from a leading 5. Henry Street and its environs international brand, in what is one of the Penneys, Debenhams, M&S, Dunnes suggesting scope for further appreciation. 8,000 are undergoing a substantial Stores, TK Maxx, Zara, H&M, Mango and In this regard, the ESRI are forecasting largest units on the street. In Q1 2016, facelift, with a number of River Island. private consumption to grow by 3.1% in Ann Summers let the former Pamela Scott 7,000 redevelopment projects at premises at 3 Henry Street – which 2017 and by 3.0% in 2018. 6,000 various stages of delivery extends to 345 sq m – for a Zone A rent of Economy Despite the strong headline fundamentals, 5,000 €4,585 psm, setting a new bar for prime m challenges remain for the retail sector, Grade A rents on the street at the time. /sq The macro underpinnings that provide € challenges which are best illustrated 4,000 the basis for the case to invest in The high rent achieved can be attributed by comparing retail sales versus volumes. Irish retail remain compelling, with to the building’s prime positioning on 3,000 While retail volumes have recovered to employment, wages, immigration and Henry Street, which places it at the such an extent that they are approximately 2,000 consumer confidence all trending in the juncture between the Jervis Shopping 10% ahead of pre-crisis levels of 2008, right direction from an investor’s point Centre, Arnotts and the Ilac Centre. More 1,000 retail values remain approximately 10% of view. recently, Elvery’s Sports moved from below. Strong discounting and price 0 Arnotts to let 808 sq m in Q1 2017 under 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q3 With the recovery of the labour market deflation are two factors behind the 2017 a ten-year lease at 18 Henry Street for bringing employment back to 2006 difference, and encapsulate the a Zone A rent of €4,413 psm. Source: Knight Frank Research levels, wage inflation has begun to take competitive pressures faced by retailers hold – average hourly earnings are who are pitching their products to a value FIGURE 1 Retail Sales Index (Excluding fuel, motor and bar sales) 130 120 RETAIL 110 RENTS ON HENRY STREET ARE €4,850 PSM 100 FOR PRIME ZONE A SPACE 90 Value Volume 80 2010 2011 2012 2013 2014 2015 2016 Q2 2017 Source: CSO 2 3 THE HENRY STREET REPORT RESEARCH HENRY STREET 1 5 GPO Buildings 1 Former Clery’s 2 Dublin Central 3 Ilac Shopping2 Centre 34 7-9 Henry Street 53 Jervis 1 36 Henry Street Estimated Sale Price: €8,500,000 Department Store Developer: Hammerson Developer: Hammerson & Irish Life Developer: Fitzwilliam Shopping Centre Date: Q4 2014 Yield: NIY 4.55% EY 3.25% Developer: Natrium Status: Planning granted Status: Completed Capital Partners Developer: Arcadia Group Tenant: iConnect Sold: Q2 2015 Status: Planning granted Retail space: 56,155 sq m Retail space: 735 sq m Status: Under Construction Status: Completed Owner: Hammerson Buyer: Irish Life Retail space: 3,478 sq m Note: Total planning permission Note: Amalgamation and extension of Retail space: 3,783 sq m Retail space: 1,858 sq m Accommodation: 492 sq m Note: Planning permission allows granted for this mixed-use existing retail units to incorporate part Note: Consists of the creation of Note: Consisted of the amalgamation Rent: €160,000 pa for two medium sized units at development extends to of covered walkway as internal space a single retail unit via the separation of three retail units into one single unit Zone A: €1,841 psm basement, ground and first floors 158,000 sq m of 7-9 Henry Street from Arnotts with 2 35 Henry Street completion due for September 2018 Sale Price: €9,500,000 2 37 Henry Street Yield: NIY 4.27% EY 3.50% DOMINIC STR LOWER Date: Q4 2015 Sold: Q4 2016 Tenant: eir Buyer: Friends First Owner: Hammerson Accommodation: N/A Rent: €215,000 pa KINGS INN STREET 3 42-43 Henry Street Zone A: €2,917 psm Sale Price: €20,500,000 Yield: NIY 4.04% EY 3.88% 3 22-23 Henry Street Sold: Q2 2017 Date: Q3 2015 Buyer: AEW Tenant: Pull & Bear Owner: SSGA Cineworld Accommodation: 632 sq m 4 18-21 Henry Street Rent: €375,000 pa Zone A: 3,014 psm Estimated Sale Price: €34,000,000 € Yield: NIY 3.66% EY 3.93% PARNELL STREET Sold: Q4 2014 Buyer: Irish Life 4 21 Henry Street Date: Q3 2016 Tenant: The Health Store Owner: Irish Life 5 17 Henry Street Accommodation: 332 sq m Sale Price: €3,500,000 MOORE STREET Rent: €200,000 pa Yield: NIY 6.02% EY 7.83% Zone A: €4,004 psm Sold: Q3 2014 O’COELL STREET O’COELL Buyer: IPUT 5 18 Henry Street Ilac Date: Q1 2017 Tenant: Elverys Sports 6 51 Henry Street Shopping 2 Owner: Irish Life Estimated Sale Price: €5,600,000 Centre 3 Accommodation: 808 sq m Yield: NIY 3.39% EY 3.75% Rent: €460,000 pa Sold: Q2 2015 Zone A: €4,413 psm Buyer: Irish Life 6 45 Henry Street 7 52 Henry Street For Let: Q3 2017 Estimated Sale Price: €7,100,000 Owner: IPUT Yield: NIY 4.05% EY 3.50% Accommodation: 402 sq m Sold: Q2 2015 Quoting Rent: €420,000 pa 8 LIFESTYLE SPORTS Zone A: €3,660 psm Buyer: Irish Life DUNNES STORES ANN'S BAKERY ANN'S RIVER ISLAND 2 1 DEBENHAMS 6 JD SPORTS 7 VODAFONE 7 6 ICONNECT LET AGREED 9 CARROLLS 2 BAG CITY PENNEYS DIFFNEY MANGO DIESEL THREE DEALZ STAR JERVIS STREET JERVIS TO LET BUCKS ZARA EVANS LUSH H&M TOURSIT EIR EIR INFO 7 46-47 Henry Street 8 43-44 Mary Street 3 Date: Q1 2014 VODAPHONE BUTLERS Sale Price: €17,000,000 GINOS SWAROVSKI PANDORA Tenant: Mango Yield: NIY 4.76% EY 3.99% PETER MARKS MARY STREET CARPHONE WAREHOUSE HENRY STREET DIRECT SPORTS LET Owner: Irish Life HICKEYS POST OFFICE KORKYS BOOTS CHEMIST HEALTH STORE DIRECTION FIELDS CLARKS SPARY GAME STOP JD SPORTS HAIR HICKEYS HOLLAND & BARRETT ELVERYS SPORTS OFFICE NEXT SKECHERS MARKS & SPENCERS VISION EXPRESS PULL & BEAR THREE ANN SUMMERS TOPSHOP ALDO H SAMUEL AGREED McDONALDS Sold: Q4 2014 FOREVER 21 Accommodation: 1,797 sq m Buyer: SSGA 9 1 Rent: €650,000 pa SUGAR DOLLS 1 Zone A: €3,444 psm 5 4 3 9 4 4 14-16 Mary Street 5 8 Sale Price: €17,000,000 8 3 Henry Street GPO Arcade Date: Q1 2016 Yield: NIY 4.13% EY 4.04%