Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
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O N T H E G R O U N D : D U b l i N Something for irish eyes to smile about again In the late 1990s and early 2000s, everyone heard the roar of the Irish tiger. Investment and development there were at an all-time high, and the retail market was burgeoning. Then in 2008 the tiger became a kitten as Ire- land, and Dublin in particular, suffered when the global crash brought the consequences of years of overzealous domestic bank lending. "How tough were trading conditions then? Very tough," said Larry Brennan, chairman and director of retail at Savills (Ireland). "We saw sales completely col- lapse in Ireland. Nobody had the perfect portfolio. Retailers might have had the top 20 to 30 percent of their portfolio still making money, but the rest was causing such an issue. So yes, it's been difficult." With taxpayers forced to bail out the banks, the country swallowed some bitter medicine. "The Irish economic problems are well versed: tax increases, job losses, pay cuts; it really was the perfect storm culminat- ing in the collapse of consumer sentiment," Brennan said. "Retail sales started tumbling in 2008, and since then, it's been a question of fire fighting with key mall owners working with tenants to find solutions to help any that were struggling to survive." This fire fighting has paid off. Through a combination of European Union bail- outs, U.K. government loans and austerity measures, Ireland officially emerged from recession in September 2013. And it con- tinues to improve. "The Irish economy has finally recovered the ground lost during the crash, as strong growth in 2014 returned both GDP and GNP to above 2008 levels in real terms," said a report from Dublin's City Council in April. In the first two months of this year alone, the volume of retail sales grew by 2.7 percent from the year-ago comparable period, according to CBRE. So well have Ire- land and Dublin recovered that Pricewater- houseCoopers ranks the city among the top five European real estate investment markets for 2015 (the other four being Berlin, Ma- drid, Hamburg and Athens). "[Dublin] has a good story to tell: strong rental growth based on low supply, employment growth and an improving economy. The joblessness rate dropped in April to under 9 percent, from a 2012 high of 13 percent. Over the past decade Dublin has become something of a tech mecca, attracting Amazon.com, Facebook, Google, LinkedIn, PayPal and Twitter. "Employment growth is the big driver from a retail point of view," said Stephen Murray, director of retail at JLL Ireland. "International names are looking here because of those tech firms," said Florence Stanley, executive director for retail agency at CBRE, in Ireland. Stanley says the number of European workers in Dublin has encouraged such retailers as Zara and Massimo Dutti to expand. Indeed, Massimo Dutti opened its largest European shop on Dublin's prime Grafton Street last year. Other retailers have been choos- ing the city's malls. Dundrum Town Centre, Ireland's largest mall, on the outskirts of Dublin, is attracting such names as Jack & Jones and Hollister. But retailers are still concentrating on prime shopping areas. "Occupiers are more risk adverse: They will want to focus their attention on the established prime pitch and be cautious of step- ping off that prime pitch," said Murray. There is also unlikely to be any new major retail development. "We will see extensions rather than new build," said Murray, noting that some tenants have temporary leases that can be terminated early if a superior tenant wants that space. "We have enough square footage. Shopping center built square foot- age per capita in Ireland is one of the high- est in Europe." Indeed, as of midyear 2014, existing shopping center stock in Ireland was at nearly 500 square meters (nearly 5,400 square feet) per 1,000 inhabitants, according to JLL. This was behind only Lux- embourg and the Netherlands, and ahead of France, Germany, Sweden, the U.K. and many others. Cherrywood, a 400-acre site in south Dublin, is the main area touted for any future development. The U.S.-based Hines group purchased the site in December for €280 million (about $315 million). It has planning permission for a retail-led mixed-use project, though expectations are that the retail side will not be developed for a few years. Until then, those in Dublin are happy with the way the market is growing and the economy is moving. Perhaps it will be a while yet before the tiger roars again, but in the meantime, some loud purring can definitely be heard, at least. — Noella Pio-Kivlehan 50 S C T / J U N E 2 0 1 5 D u n D r u m T o w n C e n T r e