Galway City centre future trends in retail and office property
In this weeks edition of the Galway Advertiser, Enda McGuane, managing director of Winters Property Management writes about future trends in retail and office property for Galway and the impacts COVID-19 has had on this sector.
Over the last week, we have seen people back on the streets as some businesses have been able to open post the latest lockdown. This is a crucial period for the city, and in particular for retailers and hospitality businesses. Thus, this week we are going to look at the city centre, and in particular retail and office space. We will start with the important figures but we will then try to get behind these numbers and look at the trends.
For retailers and hospitality businesses alike it has been a difficult year. City centres have been largely empty for large parts of the year and this has had a visible impact on unit occupancy across all our major streets. Rents are described as static in many reports, however, in reality, many landlords and retailers have worked together and rent waivers have been common. In contrast, however, many suburban retailers and small-town shopping centres have reported their highest footfall in years as people started to shop local when they could not get into town. Online shopping was growing steadily for the last number of years but 2020 has seen it take off at an unprecedented pace. We all know people who have moved from barely sending an email to doing all their Christmas shopping online; this, in turn, has seen big jumps in demand for industrial and storage space near to motorways to fulfil the demand and to meet “last mile” delivery requirements.
However, what does the future hold for Galway city centre? To look at this we need to explore what we mean by retailing. There are potentially two parts, one is “buying”, which focuses on making it as easy as possible to purchase something saving time and hassle, it’s about convenience. The other is “shopping”, which is more about providing customers with an experience that they enjoy and want to spend time doing. Buying is great for essential items, or for items, we have tried on in a shop and know that they fit or are exactly what we want. So essentially online is great for this.
Shopping, on the other hand, is a much more personal experience. It requires a physical presence. It also affords the retailer an opportunity to add more value by helping the shopper to solve problems such as “what do I buy my wife for Christmas?” The goods for sale are almost secondary to the whole purchasing experience. To varying degrees, when making a purchase, we all want an experience. This desire has not gone away as highlighted in a recent report by the Urban Land Institute, and how we attempt to meet this need is key to the future of retailing and to what the city centre will look like in the immediate future.
We are in the midst of a major change, which also brings opportunities. As big-name brands move online (Top Shop and Debenhams, for example ) space is being created for smaller retailers with a more personalised shopping experience. To support this transition, we need to attract people back into the city centre. Policies like the city council’s transport and public realm strategies will help to make it easier to get to the city centre and enhance how it looks. As retailing is changing so should how we view the city centre, and there is huge potential for the repurposing of some former retail units into small workspaces for both artistic and commercial purposes. The Living City initiative was introduced several years ago to increase housing supply in our city centres and address vacancies, so maybe now is the time for this to take off. Another way we can do this is through more people working in the city, and we will look at offices next.
Currently, Galway has a vacancy rate of just 4.9 per cent with standing stock rents at €301 per sq m. Two significant sites, Bonham Quay and Crowne Square, are under construction and both developments are going to be a significant addition to the Galway office market. Obviously, over the last few months, there has been quite a lot of debate about the role of the office in the future due to greater adoption of homeworking. Utopian visions of everyone having a home office and no commute have been put forward by many commentators. However the reality is somewhat different, and it varies from sector to sector. Many people have found that after an initial high homeworking becomes difficult due to feelings of isolation and working in a house/apartment that was designed as a home, not an office. In simple terms many people missed the ability to have a conversation over a cup of coffee. Whether this conversation is problem-solving a work issue or discussing Netflix, it is a really important element of our working day. The more likely trend is that we will see a blended approach to working with a mix of home working and office working common, probably with three days in the office becoming the norm.
You might still think that with fewer people in offices the requirements for new office space will drop, but that is not the case. How we occupy office space has changed as well, hot desking has become impossible due to Covid, for obvious reasons, we also need to maintain good air quality, so as a result desks are spaced further apart. So, in fact, we are seeing a demand for more office space to cater for these requirements. In addition, the quality of the workspace is very important, quality certifications such as BREAM, LEED, or WELL Building help to make the workspace healthier and make the building more sustainable. Both of the new developments I mentioned earlier will have a number of certifications which will make them attractive to companies and staff alike and will be a great addition to the city and can help to create footfall in our city centre as it evolves.