City centre retailers face 20% rent hike

Improving consumer demand is likely to drive up rents by 20% over the next five years for retail units on Galway City’s main shopping streets, according to a new industry report.

The predicted growth rate for the city centre is on a par with Grafton Street, Dublin’s main shopping thoroughfare.

The Irish Commercial Property report from Cushman & Wakefield – the commercial arm of Sherry Fitzgerald – predicts that rents will also continue to increase because of a shortage of available units.

“Upward rental pressure at a rate of 4% annually is forecast for the next five years, one the back of improving consumer demand and a shortage of prime retail units, particularly on Shop Street.

“Irish commercial property saw another positive year in 2016, with moderate growth in rental levels across all sectors, combined with slight yield compression.

“Despite uncertainty within the market stemming from the UK’s political and economic prospects following the triggering of Article 50 (Brexit), Irish property looks resilient and poised for a positive outlook.

“Strong demand from both occupiers and investors sees forecasted prime rental values trending upwards, and further compression on yields across all sectors in the short-term,” the report reads.

It also noted a shortage in office space in Galway, which will have a similar effect on rents, driving them up by a predicted 35% over the next five years.

“On the back of a shortage of supply in the regional centres, upward movement is forecast in all three regional cities over the next five years. In Galway, a critical supply shortage is placing upward pressure on prime rents, with a five-year average annual growth rate of 7% forecasted,” the report reads.

For the industrial sector, the study found the strongest rental growth over the past five years, and further upward rental value pressure is expected to continue.