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 challenges remain for the retail sector, Grade A rents on the street at the time.
The macro underpinnings that provide € /sq m 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)
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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