Work on Dublin’s planned schemes has slowed to a snail’s pace as developers struggle to find retailers willing to sign in such uncertain times. Liz Morrell assesses development prospects

As with the UK, the Republic of Ireland has been hard hit by the effects of the recession and its impact on the retail development pipeline. During the good times retail developments aplenty were planned for the country’s capital. But with heavy tax increases, falling GDP and rising unemployment, the prospects for Dublin’s retail property scene appear none too promising.

“It’s like the UK but 10 times worse,” says New Look group managing director Will Kernan. However, as a value retailer he says the Republic of Ireland is still a market that New Look remains committed to. “It remains one of our most profitable regions and is somewhere we want to continue to expand in. If there is the right space and the right unit at the right rent, we will be there,” he says.

In theory there should be little shortage of “the right space” for the fashion retailer, which wants to add around 15 stores to its existing 24 in the Republic. A raft of centre extensions, as well as new schemes, are either in initial planning or awaiting final approval. But the number that actually stand a chance of making it into bricks and mortar – or of letting profitably – is in doubt.

It is now a common belief that few of the new schemes are likely to be started until economic prospects and funding availability improves. Opening dates are also slipping. CB Richard Ellis director Cormac Kennedy says: “A lot of the schemes that are in the ground and under construction are finishing off, but any schemes that haven’t started yet won’t for some time.”

Kernan agrees. “Things have slowed down enormously. It’s frustrating but it is clear that new scheme development has dried up because of a lack of liquidity,” he says.

In the pipeline

Developer Chartered Land has three major Dublin projects in the pipeline. Two are extensions to the Dundrum Shopping Centre and Swords Pavilions Centre. The other is the opening of Dublin Central, the 1.7 million sq ft retail-led mixed-use scheme, which will include 109 retail units and be anchored by John Lewis.

Some objections were raised when the plans for Dublin Central went to the Irish planning board. However, the vast majority of these objections have been resolved and following an oral hearing last week, the developer expects to receive notification of planning permission in the not too distant future.

Chartered Land chief executive Dominic Deeny says: “Each are signif-icant projects in themselves and we have secured anchor lettings for each and have planning applications in
all three cases, but are waiting for determination from the appeals board.” He says he hopes to clear all three through the planning appeal process by the end of the summer.

At the Swords Pavilions Centre, 100 new retail units are proposed and there has been an agreement in principle since last September for Marks & Spencer and House of Fraser to anchor it. Meanwhile the phase three opening of Dundrum Town Centre will herald the arrival of another 100 units.

However it is the arrival of John Lewis’s first Irish store at the developer’s Dublin Central scheme that is most eagerly awaited, after the retailer signed for a 250,000 sq ft store
last November.

For the past six to eight months Chartered Land has been talking to major space users that would be likely to take units at Dublin Central, but admits there have been no more deals yet.

Kernan says New Look wants a store at Dublin Central but – as with other developments – wants clarity on opening before it commits. “It’s a catch 22,” he says. “As retailers we want certainty and if we can get certainty we will sign up to be there.”

This reluctancy is hampering pre-lets for schemes more generally. “The biggest factor affecting future developments that haven’t gone in the ground yet is funding, where the level of pre-lets is likely to be required to be higher than ever before,” says Kennedy.

Deeny admits this is proving problematic. “We continue to talk to retailers but at the present time the feedback we are getting is: ‘Let’s see evidence that the downturn is bottoming out and then we will be happy to sit down and discuss deals’,” he says.

Chartered Land isn’t committing to timescales for any of its developments but admits that schedules will slip. “We will continue to refine these projects with a view to commence on site when the market stabilises,” says Deeny.

What happens in the next few months will determine their fate. “It’s unlikely we will commence all three at the same time. They are all in the running and we will keep them ready to roll. At some stage in the next 12 months we will decide which will go first. If the demand is there we may go ahead with more than one, but we would need to be confident that the turn has happened and that retailers are confident about taking space again,” he explains.

He admits that in reality, there will be at least a year’s wait before going on site – even before clearing the hurdle of next-stage funding and improved retail sentiment. He says: “Retailers need to see the economy bottoming out. We are still in a period of contraction and consumers are losing confidence and spending less.”

With each project being a three- to four-year build, Deeny admits that the very earliest delivery time is now 2013 – more likely 2014.

At close Quarters

Dublin Central is also competing with the Northern Quarter scheme in the city centre – a joint development venture between Arnotts and Centros. This scheme was granted planning
permission last summer and will include a 30,000 sq ft Arnotts store and around 50 retail units mainly targeted at mid- to upper-market fashion retailers. Although permission has been granted, further refinements to help win the battle for funding are being made.

John Laker, whose company Ldm is the development consultancy on the scheme, is reticent to discuss planned changes but says the fundamentals of the scheme will remain the same.
“We are working on a more detailed design and looking at how we can keep improving things such as how we can better configure the retail,” he says. 

So far, apart from the Arnotts anchor and a refurbished Penneys store, no further signings have taken place – although discussions are ongoing with fashion retailers that are major space users. Laker says: “Retailers are cautious, but there has been good interest and that is encouraging.”

Tim Hance, head of group retail agency at King Sturge and joint letting agent for Northern Quarter, says: “We have kick-started negotiations and hope to have three major space users signed by the end of this year.”

Furthermore, earlier this month Arnotts also revealed its plans to phase the development, with the new Arnotts store opening as part of phase one. This would allow retailers to take
concessions in the Arnotts store as an interim space until their units within the scheme are ready, while existing concessions can also continue to be accommodated.

Hance explains: “It’s almost like a nursery. There are a number of concessions within the store who are now talking to us to take a full-blown store in the centre.” Fashion retailers such as Desigual, Oasis, Austin Reed and Hobbs have all opened their first outlets in Dublin as concessions there.

Site work at the Northern Quarter was to have begun this summer to complete in 2012, but the target date has slipped to at least 2014. However, Laker says he is sure the scheme will go ahead. “We are as confident as anyone can be in a market as it is at the moment,” he says.

The argument over whether Dublin Central or the Northern Quarter will win the race is fierce. As Kennedy says: “There is an ongoing debate on which scheme is going to be built first. Both are very good and well designed, but I can’t see both starting together.”

Many believe that the Northern Quarter, the smaller scheme with half the number of units and therefore a lower number of pre-lets to achieve before securing funding, will emerge triumphant. Some believe the sheer size of Dublin Central will result in substantial delays, while others believe its anchor John Lewis will prove its saviour.

While the immediate prospects of Dublin’s retail property scene look ominously uncertain, the waiting game will have to continue.

Elsewhere in Ireland….

Waterford Deerland Properties has pledged to open its 23-store Ferrybank shopping centre – anchored by Dunnes – at the end of October.

County Kildare Developer Marshalsea Property insists that its 45-store fashion and homewares Naas shopping centre, also anchored by Dunnes, will still open by the end of the year, despite rumours to the contrary. The centre is said to be letting “reasonably well” but agents believe the opening date is more likely to be early next year.

Limerick Work on the 50-store Parkway Valley scheme was halted at the end of last year after developer Liam Carroll of Dannagan hit financial difficulties and failed to sign anchor tenants. It was supposed to open this autumn.

Cork The fashion-focused 19-store Opera Avenue development is said to be going “reasonably well” and is scheduled to open this autumn.

Dublin Marketing has just begun for Point Village, which will centre around entertainment venue The 02 and include a 40-store retail centre. It follows a dispute between anchor tenant Dunnes and developer Harry Crosbie, which was resolved last month. The centre is now due to open in autumn 2010.

Retail in Ireland: Why Irish eyes aren’t smiling