Shoppers of a rather peculiar flavor invaded the Jervis shopping center last week, and no, they weren’t looking for half-off toaster ovens. Up to 13 first-round offers were submitted for the Dublin city center mall, which the owners, Paddy McKillen and Padraig Drayne, covertly decided to retire from the real estate game. Who knew shopping could be so riveting?
This marks the first time the shopping center has dared to face the market since its inception by McKillen, Drayne, and their buddy Paschal Taggart way back in the 1990s—at a time when floppy disks were an exciting tech advancement. It stands as a relic, one of the very few centers built in the last thirty years still held by its original creators. Irony, anyone?
The Sunday Times informs us that among the eager bidders were the Comer Group (a group whose name makes me think they’ve cornered the market on pizza), US property titan Hines, Peter Horgan’s Lugus Capital, and Patron Capital. Let’s not forget David Goddard’s Lanthorn, showing that even investment firms can have names that sound like medieval taverns.
Hot on the heels of this auction frenzy came strong bids for Marlet’s trio of retail parks scattered across Dublin, Louth, and Tipperary—proof that someone still finds joy in group shopping.
Remarkably, retail has emerged as the golden child of the property investment market, snatching the most capital while its office and private rental counterparts wallow in their sadness. The post-COVID retail revival is so astonishing that it might as well feature in a magical realism novel where stores come back to life and reclaim their lost customers. Last year’s disastrous forecasts have been put on the back burner; after all, retail has a flair for resurrection.
In a plot twist, AIB’s recent retail report revealed that in-store spending increased by 2% compared to the same time last year. What a shocker! Maybe consumers are finally tired of online binge-shopping in their pajamas and fancy the sweet, fresh air of an actual store. The EY Future Consumer Index even reported that 70% of people preferred the thrill of in-store shopping for everyday knick-knacks. The rush of choosing between cereal brands in-person—riveting!
Jean McCabe, CEO of Retail Excellence Ireland, chimed in, explaining that customers are returning to stores for “the experience.” Apparently, the thrill of dodging other shoppers for the last pair of size 10 pumps really can’t be replicated online. Retailers, being clever creatures, are opening more stores to secure economies of scale, as if we needed more fluorescent lighting in our lives.
Brendan McDowell, founder of BPerfect Cosmetics, discussed his journey from e-commerce wizard to physical store mogul, opening 13 brick-and-mortar locations in just five years. He got savvy and tested the market with pop-up stores, which is basically retail’s version of speed dating. “When we first opened in Blanchardstown in 2022, there were plenty of empty units, which made securing favorable deals as easy as pie,” McDowell lamented. Who knew retailing would feel even more like a game of musical chairs?
Perhaps the most entertaining aspect of this whole retail saga is how the market has morphed over the years. Once dominated by the likes of Irish Life and Iput, the scene now features private equity funds swooping in like hawks at a buffet. Neil Bannon, executive chairman of Bannon, noted that over 50 shopping centers fell into the hands of private equity and hedge funds at one point between 2015 and 2020. Talk about a retail soap opera!
Fast forward to today, and many of these gems are being offloaded to institutional owners, mostly international pension funds eager to take over the lucrative landscape. Because who wouldn’t want to manage shopping centers? It’s the kind of job that sounds like fun until you dive into service charges that cost more than your monthly rent.
While the Jervis center attracted a veritable cornucopia of offers at a salivating €120 million (not including parking, because that would be ridiculous), Max Reilly noted that international investors have their sights set on minimum deal sizes, likely pondering their next beach vacation in Marbella.
The truth is, retail parks are staging a comeback, once again finding their way back to institutional ownership. These parks, considered easier to manage and with fewer tenants than shopping centers, are in high demand among funds looking for reliable investments. It’s a retail renaissance! The irony is thick enough to slice with a butter knife.
Now, with all the excitement and drama, it’s vital to acknowledge some closures and shifts. Shopping centers in more obscure locations still have vacancy levels akin to an airport on Christmas Day. However, the closures open the doors to new events, allowing fresh brands to fill empty spaces. Bannon observes that the shifting landscape may provide the perfect opportunity to revitalize tenant mixes—retail resilience may just be the favorite buzzword of 2023.
