HENRY STREET THE RESEARCH - Knight Frank

Page created by Wade Hernandez
 
CONTINUE READING
HENRY STREET THE RESEARCH - Knight Frank
RESEARCH

THE

HENRY
STREET
REPORT

      TRENDS   ANALYSIS   OUTLOOK
HENRY STREET THE RESEARCH - Knight Frank
THE HENRY STREET REPORT                                      RESEARCH

    SUMMARY                                 HENRY STREET
    1.	Growth in real incomes is           Introduction                                           projected to rise by 2.5% in 2017
                                                                                                   according to the Economic and Social
                                                                                                                                                     conscious Irish consumer, a behavioural
                                                                                                                                                     legacy of the recent recession. Whether
                                                                                                                                                                                                     With 1 GPO Buildings now let agreed, the
                                                                                                                                                                                                     only building available on a new lease is
                                                                                                                                                                                                                                                               spread over ground and upper ground
                                                                                                                                                                                                                                                               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
                                            thoroughfare known as Henry Street is                  of a 0.6% forecast for general inflation,         remains to be seen. The fall in the value       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                                                                                                                                                                          five stores in the Jervis Shopping Centre.                Centre. A further example of this demand
                                            namely Henry Street and Mary Street,                   consumer confidence, which is almost
        institutional investors for prime
        retail assets in Dublin has
                                            with the demarcation between the two
                                            occurring at Liffey Street. Recording an
                                                                                                   back at the ten-year high level achieved
                                                                                                   in early 2016, before the uncertainty
                                                                                                                                                     Letting                                         The retailer has dropped its Wallace, Miss
                                                                                                                                                                                                     Selfridge and Burton stores, replacing them
                                                                                                                                                                                                                                                               was TK Maxx’s letting of 3,250 sq m at
                                                                                                                                                                                                                                                               the Ilac Centre in 2014, where they pay
        benefited Henry Street                                                                     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.
                                            annual footfall of 30 million, the street has
                                            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
        at 3.75%                            shops, department stores and two                       in the past three years to now exceed             Zone A rent of €3,444 psm. At the time,         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                                                              suggesting scope for further appreciation.        international brand, in what is one of the
                                            Penneys, Debenhams, M&S, Dunnes                                                                                                                                  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                                                                  2017 and by 3.0% in 2018.                         premises at 3 Henry Street – which                      6,000
        various stages of delivery
                                            Economy                                                Despite the strong headline fundamentals,
                                                                                                                                                     extends to 345 sq m – for a Zone A rent of
                                                                                                                                                     €4,585 psm, setting a new bar for prime                 5,000

                                                                                                                                                                                                    €/sq m
                                                                                                   challenges remain for the retail sector,
                                            The macro underpinnings that provide                                                                     Grade A rents on the street at the time.                4,000
                                                                                                   challenges which are best illustrated
                                            the basis for the case to invest in                                                                      The high rent achieved can be attributed
                                                                                                   by comparing retail sales versus volumes.                                                                 3,000
                                            Irish retail remain compelling, with                                                                     to the building’s prime positioning on
                                                                                                   While retail volumes have recovered to
                                            employment, wages, immigration and                                                                       Henry Street, which places it at the                    2,000
                                                                                                   such an extent that they are approximately
                                            consumer confidence all trending in the                                                                  juncture between the Jervis Shopping
                                                                                                   10% ahead of pre-crisis levels of 2008,                                                                   1,000
                                            right direction from an investor’s point                                                                 Centre, Arnotts and the Ilac Centre. More
                                                                                                   retail values remain approximately 10%
                                            of view.                                                                                                 recently, Elvery’s Sports moved from                       0
                                                                                                   below. Strong discounting and price
                                                                                                                                                     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)

                                                                                                                                                                                                                                                         RET
                                            130

                                                                                                                                                                                                                                                         REN AIL
                                            120

                                                                                                                                                                                                                                                            TS
                                            110
                                                                                                                                                                                                                                                         ON
                                                                                                                                                                                                                                                        FOR HENRY S
                                            100
                                                                                                                                                                                                                                                            PRIM TREE
                                                                                                                                                                                                                                                                E ZO T AR
                                                                                                                                                                                                                                                                    NE A E €4
                                                                                                                                                                                                                                                                        SPAC ,850
                                             90
                                                                                                                                          Value                                                                                                                             E     PSM
                                                                                                                                          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 Shopping
                                                                                                                                                                                                                     2       Centre                                                                                                 4 7- 9 Henry Street
                                                                                                                                                                                                                                                                                                                                    3                                                     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%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Date: Q4 2015

                                                                                                                                                                                                                         DOM
    Sold: Q4 2016
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Tenant: eir
    Buyer: Friends First
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Owner: Hammerson
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Accommodation: N/A

                                                                                                                                                                                                                            INIC
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Rent: €215,000 pa
    3 42-43 Henry Street                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Zone A: €2,917 psm

                                                                                                            KING

                                                                                                                                                                                                                                        STR
    Sale Price: €20,500,000
    Yield: NIY 4.04% EY 3.88%                                                                                                                                                                                                                                                                                                                                                                                                                                                                               3 22-23 Henry Street

                                                                                                                                                                                                                                            LOW
                                                                                                              S INN
    Sold: Q2 2017                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           Date: Q3 2015
    Buyer: AEW                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              Tenant: Pull & Bear

                                                                                                                                                                                                                                               ER
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Owner: SSGA

                                                                                                                    STRE
                                                       Cineworld                                                                                                                                                                                                                                                                                                                                                                                                                                            Accommodation: 632 sq m
                                                                                                                                                                                                                                                                                           ET
                                                                                                                                                                                                                                                                  STRE
    4 18-21 Henry Street                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Rent: €375,000 pa
                                                                                                                                                                                                                                             LL
                                                                                                                                                                                                                                         RNE
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Zone A: €3,014 psm
                                                                                                                        ET
    Estimated Sale Price: €34,000,000
    Yield: NIY 3.66% EY 3.93%                                                                                                                                                                                                PA
    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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  Rent: €200,000 pa

                                                                                                                                                                                                                                                                                                                                                 MOO
    Yield: NIY 6.02% EY 7.83%                                                                                                                                                                                                                                                                                                                                                                                                                                                                               Zone A: €4,004 psm
    Sold: Q3 2014
    Buyer: IPUT

                                                                                                                                                                                                                                                                                                                                                      RE S

                                                                                                                                                                                                                                                                                                                                                                                                                                                                     O’CONNELL STREET
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            5 18 Henry Street
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Date: Q1 2017
                                                                                                                                                                                                                               Ilac

                                                                                                                                                                                                                                                                                                                                                         TREE
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Tenant: Elverys Sports
    6 51 Henry Street                                                                                                                                                                                                        Shopping                                                                                                                                              2                                                                                                                        Owner: Irish Life
    Estimated Sale Price: €5,600,000                                                                                                                                                                                          Centre                                                                                                              3                                                                                                                                                         Accommodation: 808 sq m

                                                                                                                                                                                                                                                                                                                                                               T
    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
    Buyer: Irish Life
                                                                                                                         8                                                                                                                                                                                                                                                                                                                                                                                  Zone A: €3,660 psm
                                                                                                                                                        LIFESTYLE SPORTS

                                                                                                                                                                                                                                                                                                                                                                                                      2 1

                                                                                                                                                                                                                                                                                                                    DUNNES ST
                                                                                                                                                                           9                                                                                                                            7 6                            7       6
                                                                                                                                                                                                                         RIVER ISLAND
                                                                                                                                     ANN'S BAKERY

                                                                                                                                                                                                                                                                                                                                                                                                                     2
                                                                                                                                                                                                                                                                             DEBENHAMS
                                                                                                                         JD SPORTS

                                                                                                                                                                                                                                                                                                        VODAF D

                                                                                                                                                                                                                                                                                                                                                                                  ICONNECT
                                                                                                                                                                                                                                                                                                        LET AG

                                                                                                                                                                                                                                                                                                                                                         CARROLLS

                                                                                                                                                                                                                                                                                                                                                                                    BAG CITY
                                                                                           PENNEYS

                                                                                                                                           DIFFNEY

                                                                                                                                                                                                                                                                                                                                                                                                                                               TOURSIT                                                      7 46-47 Henry Street

                                                                                                                                                                                                                                                                                                                                                                                     THREE
                                                                                                                                                                                                                                                                                                                                                                                     DIESEL
                                                                                                                                                                                                                                                                                                                                       MANGO
                                                                                                                                                                           DEALZ

                                                                                                                                                                                                                                                                                                                                                                                      STAR
                                                                                                                                                                                                                                                                                                                                                TO LET
                                                           JERVIS STREET

                                                                                                                                                                                                                                                                                                                                                                                      BUCKS

                                                                                                                                                                                                                                                                                                                                                                                                                                                LUSH
                                                                                                                                                                                                                                                  ZARA

                                                                                                                                                                                                                                                                                                                                                                    EVANS
                                                                                                                                                                                                      H&M

    8 43-44 Mary Street

                                                                                                                                                                                                                                                                                                                             ORES
                                                                                                                                                                                                                                                                                                                                                                            3                                                                  INFO

                                                                                                                                                                                                                                                                                                                                                                                        EIR
                                                                                                                                                                                                                                                                                                              ONE
                                                                                                                                                                                                                                                                                                              REE

                                                                                                                                                                                                                                                                                                                                                                                         EIR
                                                                                                                                                                                                                                                                                                                                                                                                                                           BUTLERS                                                          Date: Q1 2014
    Sale Price: €17,000,000                                                                                                                                                                                                                                                                                                                                                                                                 VODAPHONE
                                                                                                                                                                                                                                                                                                                                                                                     GINOS                                                                                                                  Tenant: Mango
    Yield: NIY 4.76% EY 3.99%                                                                                          PETER MARKS                                         MARY STREET                                                  CARPHONE WAREHOUSE                                                                                     HENRY STREET                          DIRECT SPORTS                       SWAROVSKI    PANDORA
                                                                                                                                                                                                                                                                                                                                                                                                                                              LET                                                           Owner: Irish Life
    Sold: Q4 2014                                                                                                                                                                                                                                                                                                                                                                                                                             AGREED

                                                                                                                                                                                                                                                                                                                                                                                                               HICKEYS
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Accommodation: 1,797 sq m

                                                                                                                                                                                                                                                                                                                                                                                                                                                       POST OFFICE
                                                                                                                                                                                                                                                                                                                                     BOOTS
                                                                                                                                                                                                                                                                                                                                     HEALTH MIST

                                                                                                                                                                                                                                                                                                                                                                                                                                       KORKYS
                                                                                                                                                                                                                                                                                                                                                                                          DIRECTION
                                                                                                                                                                                                                                                                                                                                                                                                      FIELDS
                                                                                                                                                                                                                                                                                                                                     CLARKS

                                                                                                                                                                                                                                                                                                                                                                                  SPARY
                                                                                                                                                                                                                                                                                                                                                                                  HAIR
                                                                                                                                                                                                                                                                                                                                     JD SPOR
                                                                                                                                                                                                                                                                                                                                     GAME STOP
                                                                                                                                                                                                                                                                                                                                      HOLLAND
                                                                                                                                                                                                                                                                                                                                      ELVERYS
                                                                                                                                                                                                                                                                           HICKEYS

                                                                                                                                                                                                                                                                                                                                      VISION
                                                                                                                                                                                                                                                                                         OFFICE

                                                                                                                                                                                                                                                                                                                                      PULL &
                                                                                                             NEXT

                                                                                                                                                                                                                                                             SKECHERS
                                                                                                                                                                                   MARKS & SPENCERS

                                                                                                                                                                                                                                                             ANN SUMMERS
                                                                                                                                                                                                                 THREE
                                                                                                                                              TOPSHOP

                                                                                                                                                                                                                         ALDO

                                                                                                                                                                                                                                                  H SAMUEL
                                                                           McDONALDS

                                                                                               FOREVER 21

    Buyer: SSGA                                                                        9                                                                                                                                                                                                                                                                                                                                                                                                                    Rent: €650,000 pa
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  1

                                                                                                                                                                                                                                                                                                                                            CHE
                                                                                                                                                                                                                                                                                                                                                                                                                                       1                                                                    Zone A: €3,444 psm

                                                                                                                                                                                                                                                                                                                                             EXPRES

                                                                                                                                                                                                                                                                                                                                             STORE
                                                                                                                                                                                                                                                                                                                                             BEAR

                                                                                                                                                                                                                                                                                                                                              TS
                                                                                                                                                                                                                                                                                                                                               SPORTS

                                                                                                                                                                                                                                                                                                                                                                                                                         SUGAR DOLLS
                                                                                                                                                                                                                                                                                                                                                & BARRET
                                                                                                                                                5                                                                                                                                                 4
                                                                                                                                                                                                                                                                                                                                                                            4 3

                                                                                                                                                                                                                                                                                                                                                    S
    9 14-16 Mary Street                                                                                                                                                                                                                                                                                                                             5               4
                                                                                                                                                                                                                                                              8                                                                                                                                                                                                                                             8 3 Henry Street
                                                                                                                                                                                                                                                                                                                                                         T
    Sale Price: €17,000,000                                                                                                                                                                                                                                                                                                                                                 GPO Arcade
    Yield: NIY 4.13% EY 4.04%
                                                                                                                                                                                                                                                                                                                                               5                                                                                                                                                            Date: Q1 2016
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Tenant: Ann Summers
    Sold: Q3 2017
    Buyer: SSGA                                                                                   Jervis                                                                                                                                                                                                                                                                                                                                                                                                    Owner: Irish Life
                                                                                                Shopping                                                                                                                                                                                               Arnotts                                                                                                                                                                          Former Clery's      Accommodation: 345 sq m
                                                                                                                                                                                                                                        LIFFEY STREET

                                                                                                                                                                                                                                                                                                      Department                                                                                                                                                                                            Rent: €360,000 pa
                                                                                                 Centre                                                                                                                                                                                                                                                                                                                                                                                  Department         Zone A: €4,585 psm
                                                                                                                                                                                                                                                                                                         Store                                                                                                                                                                              Store
    Key
       Lettings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             9 39 Mary Street
       Sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                Date: Q3 2015
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Tenant: Dealz
       Significant developments                                                                                                                                                                                                                                                                                                                                                                                                                                                                             Owner: Irish Life
       Luas Cross City Line                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Accommodation: 431 sq m
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Rent: €275,000 pa
       Luas Red Line                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        Zone A: €3,401 psm

                                                                                                                                                                                                                                                                                            ABBEY STREET

4                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       5
THE HENRY STREET REPORT                              RESEARCH

                                                                       Investment                                                     More recent transactions of note include
                                                                                                                                      SSGA’s purchase of the McDonald’s
                                                                       Institutional investment competition for                       tenanted 14-16 Mary Street in Q3 2017 for
        “AEW’s acquisition                                           prime retail assets in Dublin has benefited                    €17.0 million at a net initial yield of 4.13%.
           is a timely indicator                                       Henry Street and resulted in yields                            In a welcome development, international
                                                                       declining from 6.5% in 2011 to 3.75% now.
           that there is still                                         Mirroring their activity in Grafton Street,
                                                                                                                                      fund AEW completed the purchase of
                                                                                                                                      42-43 Henry Street for €20.5 million in Q2
           value to be had in                                          Irish Life have been a key long-term                           2017 representing a net initial yield of 4.04%.
                                                                       stakeholder on Henry Street, having built
           Dublin’s prime retail                                       up a substantial portfolio of assets through
                                                                                                                                      The property is let to the Arcadia Group Ltd,
                                                                                                                                      trading as Evans, and has an unexpired
           investment market                                           the years. Chief amongst these is their                        lease term of over three years and will sit in
                                                                       50% stake in the Ilac Centre – an acronym
           when viewed in a                                            of ‘Irish Life Assurance Company’ – which
                                                                                                                                      its City Retail Fund, a fund targeting prime
                                                                                                                                      high street retail in Europe. It is unlikely that
           European context.”                                          was the first city centre shopping centre in                   Evans will seek to renew the lease upon
                                                                       Dublin and the largest in Ireland when it                      expiry given they unsuccessfully marketed
                                                                       opened in 1981. In addition to this core                       the lease for assignment/sub-lease in 2014.
                                                                       holding, they own many own door retail
                                                                                                                                      With pan-European portfolio managers
                                                                       units on Henry Street with their most recent
                                                                                                                                      seeing prime retail as the best way to gain
                                                                       large acquisition being the purchase of
                                                                                                                                      exposure to an expected pick-up in
                                                                       18-21 Henry Street as part of the Capital
                                                                                                                                      European consumer spending while
                                                                       Collection for an estimated €34 million.
                                                                                                                                      mitigating the negative impact of online

                                                                                                                                                            RENTS
                                                                                                                                      spending, we perhaps would have expected
FIGURE 3
                                                                                                                                      greater interest from international funds in
Prime Henry Street yields
                                                                                                                                      Dublin high street retail given Ireland’s
    8
                                                                                                                                      out-perform growth prospects relative to its
    7
                                                                                                                                      European peers. While yield compression
    6
                                                                                                                                      has been significant, it is interesting to note
    5
                                                                                                                                      that of 27 major European cities tracked by
%

    4
                                                                                                                                      Knight Frank, there are still ten cities that are
    3
                                                                                                                                      at least as expensive as Dublin based on
    2
                                                                                                                                      current yields. AEW’s acquisition is a timely
    1
                                                                                                                                      indicator that there is still value to be had in
    0
                                                                                                                                      Dublin’s prime retail investment market
               2001

                                                                              2010

                                                                                     2011

                                                                                                                 2015
                                                  2006

                                                                                            2012
        2000

                                    2004

                                                                2008

                                                                                                   2013
                      2002

                                                                                                          2014
                             2003

                                                         2007

                                                                                                                                 Q3
                                                                                                                               2017
                                                                       2009
                                           2005

                                                                                                                        2016

                                                                                                                                      when viewed in a European context.
Source: Knight Frank                                                                                                                                                                      Development                                        management. As detailed earlier, much of       two new streets under the plan would link
                                                                                                                                                                                                                                             this value creation is being achieved by       Upper O’Connell Street and Henry Street,
                                                                                                                                                                                          Henry Street and its environs are currently        amalgamating smaller stores into larger        boosting consumer draw and enhancing the
                                                                                                                                                                                          undergoing a substantial facelift, with            ones in order to meet the demands of large     accessibility of the location. In addition, the
                                                                                                                                                                                          a number of redevelopment projects at              international retailers. In a similar vein,    portion of Dublin Central with frontage onto
                                                                                                                                                                                          various stages of delivery. When finished,         Arnotts has just announced that they will      Henry Street should significantly strengthen
                                                                                                                                                                                          these projects have the cumulative                 inject a further €4.0 million in capital       the retail offering of the GPO end of the
                                                                                                                                                                                          potential to significantly augment Henry           expenditure into the store following the       street which has struggled to attract
                                                                                                                                                                                          Street’s retail appeal.                            €2.5 million commitment announced last         high-end retailers, owing to the presence of
                                                                                                                                                                                          Leading much of this change is Hammerson,          year, with a major component of this           a number of small and poorly configured

        PRIME YIELDS                                                                                                                                                                      who have acquired a significant interest in
                                                                                                                                                                                          the area following their acquisition of Project
                                                                                                                                                                                                                                             expected to be spent on reconfiguring the
                                                                                                                                                                                                                                             store. Meanwhile, following a deal with the
                                                                                                                                                                                                                                                                                            retail units.

        CURRENTLY STAND AT                                                                                                                                                                                                                                                                  On the eastern side of O’Connell Street,

        3.75%
                                                                                                                                                                                          Jewel from NAMA in 2015, which included a          Westin Family, Noel Smyth has started
                                                                                                                                                                                                                                                                                            the redevelopment of the former Clery’s
                                                                                                                                                                                          50% stake in the Ilac Centre as well as the        construction to separate 7-9 Henry Street
                                                                                                                                                                                                                                                                                            Department Store will provide for 3,478
                                                                                                                                                                                          Dublin Central site. At the Ilac Centre they,      from the Arnotts store in order to create an
                                                                                                                                                                                                                                                                                            sq m of retail and will re-establish the street
                                                                                                                                                                                          along with joint venture partner Irish Life,       independent retail unit which will consist
                                                                                                                                                                                                                                                                                            as a retail destination once again, having
                                                                                                                                                                                          have recently completed the reconfiguration        of 3,783 sq m of retail space.
                                                                                                                                                                                                                                                                                            become increasingly dominated by food
                                                                                                                                                                                          of ten smaller units into five larger ones, with   Long-term, however, the real catalyst for      and beverage retailers in recent times. The
                                                                                                                                                                                          the rental uplift achieved, returning twice the    change will be Hammerson’s ‘Dublin             Clery’s and Dublin Central redevelopments
                                                                                                                                                                                          €1.5 million capital expenditure invested.         Central’ project. Assembled over a decade      along with the addition of two Luas stops on
                                                                                                                                                                                          With the Ilac Centre achieving rents of about      by Chartered Land, the five acre city centre   the new Cross City Line will bring increased
                                                                                                                                                                                          a third of Dundrum – despite having the            site has planning permission for 158,000       footfall to O’Connell Street and Henry
                                                                                                                                                                                          same annual footfall of approximately 18           sq m of mixed-uses. With the majority of       Street. The linking with the Luas Green Line
                                                                                                                                                                                          million – there is a clear opportunity to          the development fronting onto Upper            will help the location make inroads into the
                                                                                                                                                                                          enhance returns through active asset               O’Connell Street, the proposed addition of     south-side retail catchment area.

6                                                                                                                                                                                                                                                                                                                                        7
RESEARCH
                                                                                                                                                                                                                                              John Ring, Head of Research
                                                                                                                                                                                                                                              john.ring@ie.knightfrank.com

                                                                                                                                                                                                                                              Robert O’Connor, Research Analyst
                                                                                                                                                                                                                                              robert.oconnor@ie.knightfrank.com

                                                                                                                                                                                                                                              CAPITAL MARKETS/RETAIL
                                                                                                                                                                                                                                              Adrian Trueick, Director
                                                                                                                                                                                                                                              adrian.trueick@ie.knightfrank.com

                                                                                                                                                                                                                                              Peter Flanagan, Director
                                                                                                                                                                                                                                              peter.flanagan@ie.knightfrank.com

                                                                                                                                                                                                                                              Ross Fogarty, Director
                                                                                                                                                                                                                                              ross.fogarty@ie.knightfrank.com

                                                                                                                                                                                                                                              Shaun Collins, Surveyor
                                                                                                                                                                                                                                              shaun.collins@ie.knightfrank.com

                                                                                                                                                                                                                                           © HT Meagher O’Reilly trading as Knight Frank
                                                                                                                                                                                                                                           This report is published for general information only and not to
                                                                                                                                                                                                                                           be relied upon in any way. Although high standards have been
                                                                                                                                                                                                                                           used in the preparation of the information, analysis, views
                                                                                                                                                                                                                                           and projections presented in this report, no responsibility or
RECENT MARKET-LEADING RESEARCH PUBLICATIONS                                                                                                                                                                                                liability whatsoever can be accepted by HT Meagher O’Reilly
                                                                                                                                                                                                                                           trading as Knight Frank for any loss or damage resultant
                                                                                                                                                                                                                                           from any use of, reliance on or reference to the contents
                                                                                                                                                                                                                                           of this document. As a general report, this material does
                                                                                                                                            RESEARCH                                                RESEARCH

                                                                                                                                                                                                                                           not necessarily represent the view of HT Meagher O’Reilly
                                                                                                THE 2018 REPORT                                                                                                                            trading as Knight Frank in relation to particular properties
                                                                                                                                                                                                                                           or projects. Reproduction of this report in whole or in part
                                                                                                                                                                                                                                           is not allowed without prior written approval of HT Meagher
                                                                   THE FUTURE
                                                                                                                                                                                                                                           O’Reilly trading as Knight Frank to the form and content
                                                                   OF REAL ESTATE
                                                                   TH E TRE N DS SHA P I N G
                                                                   40 LE A D I N G C I TI E S                                                                                                                                              within which it appears. HT Meagher O’Reilly trading as
  COLLEGE STUDENT                                                                                                                                                                                                                          Knight Frank, Registered in Ireland No. 385044, PSR Reg.
  ACCOMMODATION                                                                                                   ELON
  SURVEY                                                                                                          MUSK                      DUBLIN
                                                                                                                                            OFFICE MARKET OVERVIEW
                                                                                                                                                                                                    DUBLIN
                                                                                                                                                                                                    STUDENT HOUSING REPORT
                                                                                                                                                                                                                                           No. 001266. HT Meagher O’Reilly New Homes Limited trading
                                                                                                                                                                                                                                           as Knight Frank, Registered in Ireland No. 428289, PSR
                                                                                                                  TR A I N S, R O C KETS    Q2 2017                                                 2017
                                                                                                                  & S OL A R EN ER GY
                                             GLO B A L CI TI E S

              KNIGHTFRANK.COM/GLOBALCITIES

                                                                                                                                                                                                                                           Reg. No. 001880. Registered Office – 20-21 Upper Pembroke
                 NGKF.COM/GLOBALCITIES                                                             4th Edition
                                                                                                                                            OCCUPIER TRENDS   INVESTMENT TRENDS   MARKET OUTLOOK      TRENDS          ANALYSIS   OUTLOOK

 College student                                               Global cities Report                                                        Dublin Office Market                                    Dublin Student                          Street, Dublin 2.
 Accommodation Survey                                          - 2018                                                                      Overview - Q2 2017                                      Housing Report - 2017

Knight Frank Research Reports are available at KnightFrank.com/Research
You can also read