Which retail destinations have the most vacancies?
The economic slowdown and the unstable security and political environment obviously affect the retail real estate market. There has never been as many empty retail units across Beirut as there are today. “For Rent” signs dot the windows of the city’s main shopping streets. Certain stores have been vacant for years. Rental values are too high compared to the potential returns that a tenant could hope to achieve. Still, many store owners refuse to drop their asking prices so that they are more in line with market reality. They do not realize that it is better – and more financially logical – to be satisfied with a smaller income than no income at all!
The largest retail neighborhood of Beirut is also the most affected by the poor market conditions. Over the past few years, Beirut Central District has seen more and more retailers close shop, pack up, and leave. Very few units have found replacement tenants. Some streets are completely empty. The most badly affected areas are around Nijmeh Square, which is looking sadly empty after years of vibrant activity. Streets like Toubia Aoun, Maarad, or Omari Mosque are equally deserted. It is difficult to place a value on certain streets that are currently not attracting any tenants at all! Rental values were divided by two or three over the past few years.
The overwhelming F&B tidal wave that hit the area started between 2003 and 2004. Restaurants and pubs mushroomed over the next seven to eight years, skyrocketing rental values, which increased three to four folds within a few years. Then appeared cheaper and trendier Mar Mikhael – F&B operators moved there and customers followed. Gouraud Street has been steadily emptying since. Rental values were divided by two over the past few years.
The exodus of pubs and restaurants away from Monnot is not recent. It began with the boom of Gemmayze about a decade ago. Since then, Monnot’s popularity has been waning. F&B operators have totally lost interest in the area and the street has been slow in finding new momentum. Prices are still relatively high at USD 250-300 per SQM per year.
This regionally renowned commercial street is one of Beirut’s major shopping arteries. The central stretch between Costa Café and Roadster Diner is the most dynamic, attracting the heaviest pedestrian flux and full occupancy. The two extremities have not been able to attract commercial drivers to generate heavy pedestrian flow. There are thus about a dozen vacant shops. Rental values at both ends of Hamra should be 30-40% cheaper than the middle of Hamra.
Still a very popular commercial destination, Verdun Street attracts many franchise brand names. Vacancies are rare on street level. However, shopping galleries that were popular in the early and mid 2000’s are no longer adapted to modern demand. Shops on basement or upper floor levels with no visibility from the street must offer sizeable discounts to attract potential tenants. They will be even more affected when ABC Verdun is launched in 2017.