Neil Bannon joined Newstalk Bobby Kerr on Down to Business on Saturday to discuss what we might do to attract the investment our towns and cities need right now.
To listen to the full podcast, click here.
When a retailer considers expansion within or entry to a new territory, they must assess a wide range of factors to make a financially viable decision. Rather than Why Ireland, the Bannon Retail Team are using economic data to demonstrate to retailers – Why Not Ireland.
To start, there are several key statistics to Why Not Ireland:
The statistics don’t lie. These hard facts are aiding the post Covid retail recovery, providing confidence to expand to retailers and investors. This is evident in the number of new entrant brands who have recently signed expansion deals in Ireland including Lego, Russell & Bromley, Flannels, Carhartt & Pret A Manager to name a few.
The Bannon Retail Team is in active discussions with a range of additional new entrants. Some are considering Ireland ahead of the UK for store expansion. This is a significant shift away from the traditional route of opening in the major urban UK markets first.
Increased spend and the resulting increase in turnover is aiding retailers to make decisions to expand outside of the prime focus of city centres in Dublin, Cork, Limerick, and Galway. For example, Bannon recently welcomed Rituals to Marshes Shopping Centre in Dundalk. This demonstrates how a brand’s confidence in Ireland has seen retailer expansion strategy grow from Grafton Street to regional towns.
Whilst it might be viewed as a small country for expansion, the data provides a strong business case for retailers to decide Why Ireland should be a primary focus in their ongoing expansion plans.
Author: Jennifer Mulholland, Divisional Director, Bannon
Date: 12th October 2022
As per the SCSI / RICS Code of Practice definitions, service charges in commercial property enable an owner to recover the costs of servicing and operating a property. This is for the benefit of the occupiers and users of the services and facilities provided within the property.
The service charge arrangement is dictated by the lease of the property and presents what responsibilities fall to the service charge regime and what responsibilities fall to the occupier.
One of the key roles of the Bannon Property Management team is compiling the annual service charge budgets for the assets under our management. When doing this work, we are conscious of the impact service charge regimes have on occupiers and owners. If the budget is set too low, cashflow issues arise that affect the smooth operation of the asset. This can lead to a deterioration of the asset which will have numerous implications for users, occupiers and owners. Alternatively set the budget too high and this impacts on the viability of occupiers to pay and ability to let units.
Having a high service charge per square foot also has an impact on the rental rates the owner can achieve. This in turn negatively impacts the asset value. Therefore, it is paramount that property managers are constantly reviewing, and tracking service charge spend. This is easier said than done.
When setting the 2022 service charge budgets in Q4 2021 no surveyor could have predicted the war in Ukraine and the subsequent disruption this would create in the world economy. It is hard to believe that the Russian invasion of Ukraine has resulted in the increase occupational costs for occupiers in Irish commercial assets!
Given the increase in operational costs worldwide since January 2022, most Irish commercial assets with service charge liabilities are looking at a balancing charge at the end of the year. This is when annual service charge expenditure has exceeded the annual budgeted figure. This is due to service charge budgets being set before an escalation of the War and subsequent impact on the global economy.
The current landscape is substantially different to when we were setting 2022 service charge budgets. With the ongoing energy crisis and global economic conditions, setting 2023 service charge budgets will be more challenging than ever. Significant increases in energy costs coupled with construction costs increasing by 14% over the past 12 months according to the SCSI’s construction cost index (July 21-June 22) have created these challenges. The addition of ERO (Employment Regulation Order) increased hourly rates for cleaning and security professionals, combined with these challenges, means that we are dealing with a perfect storm.
it is imperative that the property manager strikes a balance between having a sustainable and affordable service charge budget, but to also ensure there are funds to maintain the common areas.
This is a fine balance and Bannon predicts service charge regimes will increase significantly in 2023. This will lead to hard choices for asset managers and owners. As market leaders, Irish-owned Bannon manages multiple commercial assets including shopping centres, retail parks and offices throughout Ireland. We have significant experience in setting and managing service charge budgets, helping our clients find this balance.
Author: William Lambe, Divisional Director, Bannon
Date: 5th October 2022
Sustained slide in Irish consumer sentiment points to major reassessment of economic and financial conditions.
The KBC Irish Consumer Sentiment Index slipped again in May for the fourth consecutive month. The previous four occasions this has happened in the twenty-six-year history of the survey reflected circumstances in which consumers faced marked difficulties in assessing potentially momentous changes in economic conditions. The last time the survey slipped for four consecutive months was in the summer of 2019 amid concerns over Brexit.
The current slippage follows the conflict in Ukraine and electricity/gas price hikes of 15-40% implemented by energy providers in the past two months. However, credit/debit card and Retail Sales data do not yet point to any material slowdown in spending, with expenditure on hard hit sectors such as accommodation and hospitality still recovering in May.
Looking back over the past decade the retail property market has experienced a tumultuous time. Recession following a boom, followed by a resurgence, then the impact of Brexit, Covid, the move to more on-line shopping, and more recently the war in Ukraine. Retailers and the retail property market have been the hardest hit during this period, and it may be some time before the market stabilises. However, one sector within the retail property market has outperformed in the last 3 years.
Retail Parks have come through the past two years’ experience in an even a better position that before. The sector has been the beneficiary of multiple factors.
The closure of other retail outlets funnelled consumer spend into retail warehousing parks as the only outlet for frustrated shoppers. This was helped by the nature of retail warehouse parks versus enclosed shopping centres. As large boxes with plenty of space for social distancing, they offer surface outdoor parking and ease of access for click and collect purchases.
What also helped was the focus on the products that are typically sold in retail parks. There was a perfect storm of an increase in home improvements and outdoor activities being a major focus for Covid bound customers acquiring items such as:
This all led customers to their local retail park.
The Bannon Retail Team has seen this resurgence across our extensive portfolio of Retail Parks that we lease and manage. Car numbers in retail parks are up considerably when compared to 2019 numbers, which is a different story when compared to the reduction in footfall that is being experienced in enclosed shopping centre and city centre environments.
Vacancy rates in retail parks were already low in Q1, 2020. The acceleration of transactions during and after the third Covid lockdown has pushed vacancy rates to a very low percentage. Schemes such as Limerick One Shopping Park and The Retail Park Liffey Valley currently have vacancy rates at a long-term low.
New to market retailers and those slow to expand pre-Covid are now seeking increased representation in the better parks in Dublin and provincial locations. This supply and demand dynamic may encourage owners of retail warehouse parks to start considering expanding their schemes to cater for this renewed demand.
Retailers keen for further expansion include Dutch furniture retailer JYSK, global sports brand Decathlon, Next Home, Homesense, Home Store + More, Party City and EZ Living Furniture/Interiors to name a few. This sector of the retail market will be keeping us busy for the foreseeable future.
Author: James Quinlan, Director, Bannon
Date: 6th April 2022
Major reform of the Leaving Cert is being planned from 2024 onwards which will include spreading project work and exams over fifth and sixth year.
The move aims to reduce student stress levels around the traditional written exams and introduce teacher-based assessment for projects and other course components.
Minister for Education Norma Foley is keen to proceed with reforms which would see students entering senior cycle in September 2023 sitting Paper One in English and Irish at the end of fifth year.
Over several years, 60 per cent of marks for all Leaving Cert subjects will be based on written exams and 40 per cent on additional assessment components such as project work, orals or practicals.
Teacher-based assessment of these additional components will be externally moderated by the State Examinations Commission.
The announcement on Tuesday follows a four-year review of the senior cycle by the National Council for Curriculum and Assessment (NCCA), based on consultations with students, teachers, parents and industry.
The review found while there was broad agreement exams should remain, it proposed giving greater weight to continual assessment, projects or other course components over a two- or three-year period.
On foot of Tuesday’s announcement, a selection of schools will shortly be invited to become pilot schools and participate at an early stage in revised curriculum and assessment arrangements.
Among the changes announced are:
* The introduction of two new subjects – drama, film and theatre studies; and climate action and sustainable development – which will be ready for students in pilot schools starting fifth year in 2024;
* An initial tranche of new and revised subjects will be available in pilot schools from September 2024, when students entering fifth year will study updated subject curricula, with updated assessment models in chemistry, physics, biology and business;
* Future oral exams and the music practical performance will take place during the first week of the Easter break of sixth year, as is the case this year;
* Leaving Certificate Applied (LCA) students will have improved access to maths and foreign languages from September 2022;
* A new qualification will be introduced at level one and two on the National Qualification framework to provide an appropriate level of assessment to some students with special educational needs, building on the equivalent programme at Junior Cycle level;
* Access for all students to a revised transition year programme will be encouraged.
Under Ms Foley’s plans, the NCCA and the State Examinations Commission will develop, in consultation with education partners, how an externally moderated, school-based form of assessment would operate.
However, teachers’ unions on Tuesday moved quickly to voice their opposition to any plan that involves members assessing their own students.
Teachers’ Union of Ireland (TUI) general secretary Michael Gillespie said: “Our members are fundamentally opposed to assessing their own students for State certificate purposes and therefore external assessment and State certification – which retain significant public trust – are essential for all written examinations and all additional components of assessment.”
Association of Secondary Teachers’ Ireland (ASTI) president Eamon Dennehy said certification in State exams must be “entirely externally assessed”.
“This must be retained in all aspects of the development of the Leaving Cert. It is vital that the integrity of the state exams system is maintained,” he said.
Ms Foley said the redeveloped senior cycle aims to deliver “equity and excellence for all”.
“This programme is timely and ambitious – we must not rush, but cannot delay. The timing I have set out will ensure that students will feel the benefits at the earliest possible time, with notice of these in advance.”
She said the reforms will reduce the pressure on students that comes from final assessments based primarily on exams.
“We will move to a model that uses other forms of assessment, over a less concentrated time period, in line with international best practice,” she said.
Ms Foley said these changes will enable the education system to maintain its high standards.
“Our current system has many strengths. But we know that it can be improved, to better support our students, to reduce pressure while maintaining standards, to keep pace with the changes in practices internationally and to meet the needs and expectations of our students and of our society in preparing our young people for the world ahead,” she added.
The CSO (Central Statistics Office Ireland) reported retail sales values for all business increased 4.3% on pre-pandemic levels. Taking a deeper dive this figure includes bars which remain 28.45% below 2019 data. When bars and motor trade are excluded, retail sales values have jumped 11.6% when compared to 2019 and 2020.
This positive performance is despite the level of overseas travelers to Ireland remaining 35% below 2019 and 2020 figures. The full return of tourists to Ireland will spell further good news for the retail sector.
The strength of the Irish Consumer was further emphasised this week with the CSO reporting a 2.0% annual increase in weekly earnings to €864.51 for Q4 2021. When compared to pre-pandemic levels this increase jumps to 9.9%.
The CSO Labour Force Survey also reported a year-on-year increase in the Labour Force (8.9%) along with a decrease in unemployment to 5.3% which resulted in record employment of 2.5 million people.
The result of these two factors can only be positive for the Irish retail market.
Author: Cillian O’Reilly, Surveyor, Sustainability Manager, Bannon
Date: 2nd March 2022
Snap Fitness has opened its doors in Waterford Retail Park today and, similar to all Snap Fitness gyms around the world, the new Waterford gym will open 24/7 around the clock and will have a list of comprehensive cardio and strength-training equipment that are the highest in industry standards.
Snap Fitness has a global network with more than 1,000 centres worldwide in over 20 countries, including Ireland, United Kingdom, the United States, Australia, Canada and Hong Kong. Founded in 2003, Snap Fitness allows people to work out at a time and in a way that works best for them whether it is doing cardio, lifting weights, personal training or group fitness. They also use the latest fitness technology to elevate the experience, from the equipment in the gym to tracking via Myzone and the new Snap App.
Paddy O’Connor from Sigma Retail Partners, the asset manager for Waterford Retail Park, said “Snap Fitness is especially exciting for us as it is a unique offering to Waterford Retail Park and we are very happy that they are joining our strong tenant line-up. As part of our long-term strategy, we identified health and fitness as a category that would be very beneficial for the retail park. We are very pleased with the arrival of Snap Fitness and I am sure they will do very well.”
Waterford Retail Park is easily accessed from Waterford City and is less than 10 minutes’ drive away. The retail park is located along one of the main access routes to Waterford City from the M8 and N25 (Cork Road) and benefits from free customer parking. It is also located close to the Waterford Greenway and the new Costa Coffee store will be a great pit-stop for visitors heading to and from the Greenway.
Despite the uncertainty of COVID, it is great to see such optimism across our property management portfolio with over 40 new openings since we emerged from lockdown in May 2021. Shop Local this Christmas!
