The recent An Taisce submission to Dublin City Council mentioned on this site in the last few days makes for very interesting viewing. It is a fascinating and detailed insight into the lack of planning enforcement in parts of Dublin city centre in recent years. While agreeing that planning enforcement and architectural conservation are both extremely pertinent issues, I feel the submission raises important questions about exactly what is, or should be, enforced in the first place. Although An Taisce  emphasise  shopfronts and signage, they also take issue with the amount of fast-food, convenience stores,  and discount shops, which are collectively referred to as ‘lower-order’ shops, within the streets that are surveyed (Westmoreland St., Dame St., Parliament St., and the South Quays between Westmoreland St. and Parliament St.).

Throughout the document, An Taisce focus on the connections between poor signage, planning enforcement, and quality of land-use. A key factor which they highlight is how many of the offending businesses are fast-food or convenience stores. They also try to push the link further. For example, in the first part of the document, they state that The lack of enforcement and active management of streets is a contributing factor in the ongoing loss of independent shops and businesses with ‘personality’ – as exampled by the recent closures of the Gruel and Mermaid Cafe restaurants on Dame Street.” Unfortunately, why this is the case is not expanded upon. Perhaps, when looked at on a broad level the so-called lower-order shops are better able to pay higher rents, thus placing pressure on the independent businesses? However, the exact nature of the connections between land-use, vacancy, and enforcement is something that I would argue needs far greater amounts of scrutiny.

Moving beyond issues related to enforcement and signage, the submission raises  some pertinent questions about what are deemed to be acceptable and unacceptable forms of land-use in Dublin city centre (here I am referring to the broad approach to planning in Dublin). Following from the work of Brian J.L Berry, the definition of lower-order and higher-order goods (and shops) used within Scheme’s of Special Planning Control by Dublin City council is as follows: “Lower order goods are those goods, which consumers need frequently and therefore are willing to travel only short distances for them. Higher order goods are needed less frequently so consumers are willing to travel further for them. These longer trips are usually undertaken for not only purchasing purposes but other activities as well.” In practice, lower-order shops have come to mean the likes of fast-food stores, convenience shops and discount stores, or anything else deemed undesirable in the city centre retail environment. The reasons for their domination in particular areas is often  linked to a combination of market forces and a lack of planning enforcement. The reasons often cited for why the concentration of such uses is deemed undesirable in the first place is that they are perceived to be connected to the economic decline of the city centre, due, in part, to their appearance (health issues, particularly in relation to  fast-food, might also be a fair argument, but do not seem to  ever have been raised as a factor. It would also prove a particularly difficult issue to address). Again the causal relationship here needs more detailed scrutiny, and surely proper enforcement of acceptable signage would serve to address questions of appearance.

Following from the above, and for the purposes of clarity, the issue might be divided into two overlapping, yet connected, sub-issues. On the one hand, there is the location of more permanent uses, such as fast-food and convenience stores. On the other hand, there are the temporary uses – often discount stores – which tend to operate within recently vacated stores (and often for prolonged periods). Focusing on the former, there seems to be a need to question the actually existing relationships between different land-uses within the city centre. To speculate on this, is there not a connection between fast-food and pubs/bars in a city which, since the early 1990s, has been re-orientated towards the night-time economy? In short, a starting point might be to address why these so-called lower-order functions seem to locate on the main thoroughfares in the city centre. It does not seem enough to conclude that their mere presence is a cause of economic decline. Leading on from this, and to comment briefly on the second sub-issue raised above, another important question might be orientated towards the dominance of temporary stores in recently vacated premises; ie, what are the predominant factors in these premises becoming vacant in the first place? This would include, but expand on, the issue of rents. Moreover, how can those proprietors responsible for the uses which are now there be enticed to take a more active interest in their shop-front and surrounding street.

I am not trying to state that certain parts of the city are inherently suited or given over to particular forms of land-use. Nor am I in favour of a laissezfaire approach. I do feel that there is a need to question with a great level of detail why certain types of retail or related functions are drawn to particular parts of the city,  why exactly their presence is perceived as negative, and what impact their removal might have on the city centre.

Philip Lawton

I have previously commented on this site about the impact of unsustainably high rents on businesses in Dublin city centre, and particularly in the Grafton Street Area. Almost a year on, things are beginning to look a little different on Grafton Street. At the Southern end of the street, for example, Dunnes Stores has reopened in recent months and a Disney Store is due to occupy the unit next door, with work currently underway.  Meanwhile, across the street a 3D Games shop has opened in what was then a vacant unit.  Further down the street, the former West Jewellers  has recently been bought by Brereton Jewellers and is therefore likely to be reoccupied in the near future. Furthermore, the two units on South Anne Street, which appeared in the image with West Jewellers last February, are now occupied (Opticks Eyewear and Madison furnishing and interiors store).

West Jewellers and Surroundings, corner of Grafton Street and South Anne Street, February 2010. Photo by Philip Lawton

West Jewellers and Surroundings, corner of Grafton Street and South Anne Street, December 2010. Photo by Philip Lawton

 

 

 

 

 

 

 

 

Still, however, the issue of rent is high on the agenda. One graphic illustration of this is the ‘High Rents Are Killing Our Jobs’ sign which hangs above Korky’s shoe shop on Grafton Street. Spreading the net a little wider, but staying in roughly the same area, the current crisis has claimed a number of high-profile eateries.  Although the closure of some ‘Celtic Tiger’ establishments, such as Nude on Suffolk Street, may be an indication of shifting consumer habits, a letter to the Irish Times, last Friday, 14th January from the owners of  Mermaid and Gruel on Dame Street cites what they refer to as the “…intransigence of landords who still demand boom-time rents…” as the predominant factor in the closure of their restaurants. While the ban on upward only rent reviews and the fall in values offers potential for new-comers, it seems high rents are still placing a serious burden on existing businesses. Furthermore, this is not in any way confined to the area that I have focused on here, but, as highlighted by various media sources (eg; Galway and Athlone), is a national issue.

Philip Lawton

 

Korky's Shoe Shop Grafton Street, December, 2010. Photo by Philip Lawton

 

The 2010 Q2 Dublin Retail Market Review has just been published by CB Richard Ellis.  Whilst acknowledging the drop off in retail sales, footfall and rent over the past couple of years, it suggests that the retail market in the capital is stabilising and starting to grow tentatively, although there is still downward pressure on rents which have dropped 47.5% in prime locations (see graph below).   Retail rents on Grafton Street are now back down to 2003 levels.

The pipeline for retail developments are also, not unsurprisingly slowing.  51,000 sq.m of shopping centre space will be completed by the end of 2010, and only 19,000 sq.m in 2011, with no retail park space in either year.  By the end of 2010 there will be over 2m sq.m of shopping centre space and 1.32m sq.m of retail park space in the state.  Indeed, as the graph below shows, shopping centre and retail park space has doubled since 2005, just in time for the recession.  Whilst vacancy remains low on the prime city centre locations such as Grafton Street and Henry Street, it is higher in newer suburban and small town locations around the country.  It would be good to get overall retail vacancy levels and empty floorspace for the country. (If anyone has a source for such data, I’d be grateful for the info.)  One suspects that it is a couple of hundred thousand sq. m’s, most of which is destined for NAMA and possibly has no immediate future until the economy is well on the road to recovery, unemployment is falling, and people have disposble income to spend (and even then might be surplus to demand).

For more information see the CB Richard Ellis report, which has a load more data and analysis.

Rob Kitchin

Inside Ireland reports that Retail Excellence Ireland (REI) has published a survey which reveals that 97% of the 187 companies (representing 2,200 stores) they contacted have sought a rent reduction from their landlord.  More than 30% have recieved an outright rejection to their request.  25% of retailers claimed they will be forced out of business in the next 12 months if rent is not reduced and almost 80% claim they require a rent reduction of more than 15% in order to break even.  REI argues that 35,000 jobs have so far been lost in the retail sector, and many more are under threat given the drop in both the volume and value of sales and the fact that many retailers are unable to renegotiate rental terms to a more favourable rate.  Upward only rent review clauses were banned by the Dept of Justice last December, but this did not apply retrospectively, thus doing little to relieve pressure on tenants locked into existing agreements negotiated before the recession.  REI have taken a proactive lobbying position on seeking a rent reduction, producing three short videos and bombarding local representatives with postcards asking them to pressure the Minister for Justice to enable retrospective rent review clauses.  Upward only rent reviews always seemed a dubious arrangement to me, designed to serve the interests of one group only – the landlords – regardless of market conditions.  It’ll be interesting to see what the government do here, as they are caught between two strong vested interests (retail and property/investment companies), and by enabling the reduction of rents they’ll potentially be undermining the rental income base of many properties going into NAMA (by one estimate costing the taxpayer €2.1 to €2.8bn). I suspect the pull of protecting jobs and local economies will be stronger, however, although I can envisage legal challenges to such a change – a working group is deliberating on the issue at the minute.

Rob Kitchin

That’s the conclusion of Retail Ireland, as reported in the Irish Times last week on the back of the CSO’s Retail Sales Index figures.  The CSO report that the volume of retail sales decreased by 14.1% in 2009 when compared to 2008 and decreased by 18.0% in value terms.  This was on top of a drop of volume of retail sales of 6.1% and in value of 4.5% in 2008 compared to 2007.  All retail sectors showed a decline with the most significant year on year fall in the motor trade with volume of sales down 15.1% (20.1% in value terms), with non-specialised stores (includes supermarkets) down 3.5% (9.2% in value terms).  All the indication from pundits is that the volume and value of retail sales will continue to fall in 2010, not unsurprisingly given the tightening of purse strings across the country as more and more people join the Live Register, the cuts to public sector take home pay, and most people becoming more cautious, saving rather than spending.

The worry is that we become firmly stuck in a deflationary spiral where as spending contracts, retailers and their suppliers come under pressure and start to let staff go or shut up shop, which then adds to the number of people tightening purse strings, which reduces demand and spend, and so the circle goes round.  Moreover, in this scenario it is likely that indigenous shops and producers will suffer the most, unable to compete with the bigger (overseas) chains who will potentially suck more capital out of the Irish economy.  Retail Ireland is seeking a 10%  rebate on commercial rates paid in 2009, a reduction in VAT for a specific period to stimulate sales, and government intervention in the rental market, service costs and labour rates.  This may seemingly help them in the short term, but what’s really needed is a shift to stimulate the wider economy and to create employment that will put money back in peoples’ pockets and will help breed consumer confidence to start spending again.

There has been a lot of media coverage concerning cross-border traffic flows over the past year or so, mostly focused on cross-border shopping (IAN post here). We have been trying to source some data that would reveal the numbers of cars crossing the border on a daily basis. In our naivety, we thought it might be a relatively straightforward task given the number of traffic cameras and traffic management induction loops on the principal roads, but such data has proven quite tricky to come by. Recently though we have received some data generated by the Department of Regional Development in the North. They monitor traffic flows at 12 traffic census points along the full length of the border. The data is a little out of date at this stage and relates to 2007 flows, and it is a little limited in nature, but it does give us some picture of cross-border movements.

The first map shows average cross-border daily flows for Monday to Friday, although it does not breakdown the hour or direction of the flow (although a sizable proportion of the vehicles are moving across the border and then back later in the day). The roads with the greatest flow of traffic run between Donegal and Derry (A2, Letterkenny/Derry (18,290) and A38, Lifford/Strabane (19,290)). Next, and a little way behind, comes the M1, Newry/Dundalk route (14,140). In total, on an average work day in 2007, 97,190 vehicles crossed the border. Assuming that the vast majority of journeys are bi-direction and have 1 to 2 people in the car, the data would indicate about 1-2 percent of the population of the North and South (c.50,000-100,000 people), cross the border daily.

Average daily cross-border traffic flows, 2007

The second map details the hour of peak AM flow in each direction. Interestingly, the peak hour of traffic flow on the three routes with the highest traffic is 11am in both directions with the exception of the M1 southbound which is 8am. This suggests that a large proportion of the cross-border journeys, in both directions, are not related to either work or schooling (although such flows undoubtedly occur, but as a smaller proportion of all trips). Along the south-west part of the border, between Leitrim/Sligo and Fermanagh, however, it appears that there is relatively substantial work related morning trips in both directions, but especially from the South to the North.

Peak hour of cross-border traffic flow in each direction, 2007

Clearly we’re only provided a limited snapshot here of cross-border traffic flows, but it’s a start. Hopefully we can source some more timely data that has hourly breakdowns that detail how many vehicles are travelling in each direction.

Justin Gleeson and Rob Kitchin

Adding to the flow of pessimistic predictions for 2010 is Kavanagh Fennell’s insolvencyjournal.ie.  Statistics compiled by insolvencyjournal.ie find that over 1,400 Irish companies were declared insolvent in 2009 – on average four companies a day. The 2009 total represents an 82% increase on 2008 insolvencies (773) and a 287% increase on the 2007 figure (363). Ken Fennell of insolvencyjournal.ie predicts that this rate of insolvency will continue into 2010, with a peak mid-year followed by a gradual reduction in the last quarter of the year. Not surprisingly, the construction industry was by far the worst-affected sector in 2009, with 453 construction companies declared insolvent, representing over 30% of the year’s insolvencies. While failures in the sector dipped in November, the number of construction companies going bust peaked at a year-high figure of 49 in December. That said, the onset of NAMA appears to be putting a floor under the construction sector. According to Ken Fennell: “We’ve seen a bottoming out in construction, you wouldn’t expect to see the same level of collapses there again, especially with Nama coming.”

The insolvencyjournal.ie statistics also highlight the precarious position of the services sector. After construction, the services sector was the next hardest hit with 278 insolvencies – almost 20% of the total. A further 201 companies in the retail industry collapsed in 2009, reflecting the impact of the downturn on consumer spending. High numbers of insolvencies were also recorded in the hospitality (154) – suggesting that 2010 could see a shakeout of hotels and leisure facilities.

Source: www.insolvencyjournal.ie

And what of our much-maligned bankers? As one would expect, they appear to be boxing clever in the run-up to the NAMA tsunami: while receivership cases surged in 2009 as banks moved to recover debt (124 receivers were appointed in 2009, an 118% increase from 2008), banks cut back on receivership appointments in the last month of 2009 – reducing them  from 13 in November to 7 in December. The NAMA game of “cat and mouse” continues.

Declan Curran

The CSO have released their first report on the new cross-border shopping questions on the quarterly household survey (collected April-June 2009).  The full report can be found here.

The results make pretty interesting reading.  The headlines are:

16% of households made at least one shopping trip to Northern Ireland in the 12 months before the Quarter 2 2009 survey. The highest proportion of households who shopped in Northern Ireland was recorded in the Border region (41%).

More than one in ten households in the Border region (11%) reported that they made 13 or more trips and a further 14% reported making between six and 12 trips in the period.

Total household expenditure on shopping in Northern Ireland between Quarter 2 2008 and Quarter 2 2009 was €435 million. Households spent an average of €286 on shopping on their most recent trip to Northern Ireland.

Households spent most on Groceries, with an average of €114 spent on the most recent trip.  Almost 80% of households who shopped in Northern Ireland bought Groceries on their most recent trip

The likelihood of having made a shopping trip to Northern Ireland varied by household type. Households with children were the most likely to have made a shopping trip while households where one person aged 65 or over lived alone were least likely to have shopped in Northern Ireland.

Clearly, cross-border shopping is an important aspect of the retail geography of the island, with a substantial number of shoppers crossing into Northern Ireland to take advantage of cheaper prices.  According to retailers this has led to 11,000 retail jobs being lost in the Republic (see Irish Times).  Presumably most of these jobs have been lost in Border areas and also the mid-East, but at present we do not have good data on the effects of cross-border trade on local retail or job markets.

To my mind, these data show a better picture than I was anticipating, albeit it is still worrying for Southern retailers.  €435m is approximately €100 per person per annum, a small fraction of the total amount spent on retail in a year.  Indeed, the flight of capital out of the state is probably far less than through foreign holidays, property investments overseas, and financial investments overseas, which are more likely to be less spatially skewed.  And retail spend has more likely dropped much more substantially in the South through people ‘tightening their belts’ and spending much less in general.

Rob Kitchin

The Irish Times reports that footfall in the big shopping centres such as Blanchardstown is holding up, but that spend is markedly down. The average value of retail transactions in the third quarter is €46, down from €67 in the same period last year. It is likely that this is geographically skewed, with the large, established indoor centres acting as sites of leisure and window shopping, with smaller retail centres and those along the border suffering disproportionately.  It also reports that people are now saving 12% of their income up from 2.3 per cent in 2007; that 422,500 people are claiming jobseekers’ benefit and assistance in Ireland in October, and that April 2009 to April 2010 net migration will be approximately 40,000.

This story in the same newspaper might also be of interest –Ireland less alluring for Intel 20 years on – what Ireland still has is competitive corporate tax and skilled labour, but then so do other countries so what else do we do to attract and keep FDI.

Rob Kitchin