Shoppers of a peculiar sort descended upon Jervis Shopping Centre last week, and no, they weren’t armed with coupons but with cold, hard cash — or at least cash substitutes, like “let’s make a deal” handshakes. Up to 13 offers bombarded the rather nonchalant shopping mall, which had been stealthily placed on the market by its owners, Paddy McKillen and Padraig Drayne, over the last few months. Who knew retail real estate could stir such enthusiasm? Apparently, it’s still hotter than the annual summer sale at your local outlet!
This charming shopping centre, now the belle of the bidding ball, has finally come up for sale since its inception by McKillen, Drayne, and the real estate fairy godfather, Paschal Taggart, back in the ‘90s. You’d think they’d have graduated to fancier venues by now, but hey, nostalgia is in. Unbelievably, it’s one of the last remnants of a world where shopping centres were lovingly nurtured by their creators instead of hastily handed over to the highest-bidding private equity funds.
Among those vying for the mall’s affections were the prestigious Comer Group, US property titan Hines, Peter Horgan’s Lugus Capital, Patron Capital, and David Goddard’s Lanthorn — all of whom came prepared with offers that could make even a seasoned auctioneer shed a tear of joy. Meanwhile, a shopping trifecta of barely contained excitement unfolded at Marlet’s trio of retail parks in Dublin, Louth, and Tipperary, which also experienced a flurry of initial bids. Apparently, retail is the new black.
For more than a year, retail has been the Eisner Award-winning star performer in the property investment market, dazzling onlookers while other sectors sulked in a corner. Compared to offices that couldn’t sell a paperclip and private rented schemes looking for a new identity, retail is strutting down the runway like it just won the lottery. Estate agents bravely reported that half of all property transactions in the first quarter came from retail sales. Either everyone’s suddenly in the mood for shopping, or someone’s been hitting the caffeine a little too hard.
US-based Realty Income, a firm so bold they recently dropped $950 million on the Bellagio casino in Las Vegas, decided to take a cue from the shopping revival and made waves by acquiring eight retail parks from Oaktree Capital in a €220 million deal — a classic case of “if you’re taking risks, you might as well do it in style.” They’ve also been labeled as the chosen ones — the preferred bidder on Marlet’s retail park portfolio. Clearly, post-pandemic, the phrase “death of brick-and-mortar” was a tad melodramatic. Retail is back, and it’s got a flair for the dramatic.
According to AIB’s latest retail report, in-store spending has made a sprightly leap by 2% compared to last year, but let’s be real; who can resist the allure of a physical store? The EY Future Consumer index reports that a whopping seven in ten consumers favor traditional stores for everyday purchases. Who doesn’t enjoy the unique experience of picking up a product, fondling it like a long-lost friend, and then immediately declining to buy it? CEO of Retail Excellence Ireland, Jean McCabe, confirms that customers are craving the “experience,” which is what we’ve been calling shopping since the dawn of time.
Brendan McDowell, founder of BPerfect Cosmetics, illustrates how the online-to-offline shopping transition can be smoother than a bartender’s ice-cold martini. After starting online, he now boasts 13 physical stores across the UK and Ireland. Testing the waters with pop-up stores might be the modern-day retail equivalent of speed dating — you find out fast if the chemistry is right. McDowell took full advantage of gaps left in the shopping scene post-pandemic, negotiating shorter leases, better rents, and longer rent-free periods. Who says being strategic doesn’t pay off?
And with so many retail parks being bought up at prices below replacement costs, it looks as though building new ones is not the trendy move. With demand still high and retail park occupancy rate hugging the ceiling at 100%, one wonders how long until we see the next retail renaissance, replete with artisanal coffee shops and eco-friendly boutiques. However, not every shopping centre is dancing in the limelight; those in less desirable locations are suffering the retail version of existential crisis. But there’s always hope — Bannon suggests that space left by shuttered stores can breathe new life into the market and create room for fresh brands. Resilience has become retail’s new catchphrase.
