A shortage of available units is the main factor holding back the growth of Ireland's retail sector, a new report by CBRE has found.
While occupier demand and retailer activity in prime locations have been strengthening for the last six months, leading to a 4% increase in rents on Dublin's Grafton Street, vacancy remains stubbornly high in some locations.
CBRE rated Dublin as the 78th most global city in the world in terms of retailer presence, with Belfast in 116th place, with both cities improving their ranking since last year.
The upward trend in demand began in Dublin last year and has extended to other prime high streets and shopping centres in the last six months, including Limerick, Killarney and Galway.
Overall vacancy in Dublin's prime retail streets (Grafton Street, Henry Street and Mary Street) fell from 3.87% to 2.58% during the six months to end-Q1 2016, while Killarney and Galway also recorded vacancy rates of less than 3%. Limerick recorded the most significant reduction, from 14% to 9.3%.
Rents on Dublin's Grafton Street currently stand at €5,700 per m2 per annum, while rents on Henry Street recorded their first increase since 2013, rising by 14.3% to €4,000 per m2 per annum.
By contrast, Athlone saw ground floor vacancy go up over the six-month period by 4.6% to 18.2%. Cork also experienced an increase in vacancy levels from 6.6% in Q3 2015 to 9.5% in Q1 2016, although the figure is still better than a year ago.
Bernadine Hogan, senior director in CBRE's retail agency department, said: 'In some locations, units have been amalgamated to create larger premises for potential occupiers. In other locations, a number of tenants have relocated to alternative premises on particular streets while there is clear evidence of efforts on behalf of some authorities and town councils to improve the retail landscape on streets in an effort to tackle vacancy and dereliction.'
