IN THE DAY when Grafton Street rents were among the top five in the world and massive shopping centres mushroomed in the suburbs, there seemed a limitless appetite for retail. But with spending in the doldrums, is it the high street or the shopping centre that’s faring best?

The past four years have certainly tested their mettle. A recession that made landfall at the end of 2008 didn’t discriminate between city centre and suburban mall. There followed a collapse in spending in 2009.

As Grafton Street struggled with rents that were grossly out of sync with turnover, in 2010 blizzards blighted its Christmas and January sales. And then came the floods, forcing a temporary closure of some ground floor units in Dundrum shopping centre. With VAT increases in January 2012, retailers must have wondered, what next, a plague of locusts?

CBRE’s Michael Harrington suggests in the wake of such challenges, there exists a new equilibrium between shopping centres and the high street, in Dublin at least.

“Retailing came to an abrupt standstill in the last quarter of 2008,” he says. “At that time, there was effectively six million sq ft of shopping centre space in the greater Dublin area and 5.2 million sq ft of planning permission for additional shopping centre space, that’s fairly horrific.”

Had those planned extensions at Dundrum, Tallaght, Liffey Valley and Blanchardstown gone ahead, he feels the verdict for shopping centres now would be much worse.

“None of that was built, which is great. It’s just as well the world collapsed when it did because we would probably have tumble weed blowing through Dublin schemes at the moment.”

Of course, had the boom continued, the city centre would have fought back with developments in the Northern Quarter. Instead, everything stopped.

So rather than ratcheting up a turf war between city centre and shopping centre, recession may have brought a truce.

“The principal dynamic now is that supply is at a standstill,” says Harrington.

With Dundrum, Blanchardstown and Liffey Valley at good occupancy levels, supply seems to be matching demand in Dublin’s major shopping centres.

On Grafton Street too, things have become more flexible according to Harrington, with landlords offering “a lot of rent adjustments to keep the patients alive”.

He says landlords there are now more open to short-term deals turning their vacant units into “occupied but available” units should a better tenant come along.

But Larry Brennan, director of retail at Savills Dublin and letting agent for Dundrum, feels that in times of recession, its shopping centres that are better positioned to survive.

“In harder times, it’s easier to sustain trade in a shopping centre scheme where there is a single landlord with a common purpose as opposed to in the high street scenario where there are multiple landlords with different strategies,” he says.

“On the high street, it’s much more difficult to maintain standards and quality of mix, whereas at least in a shopping centre that can be done.”

When it comes rent, shopping centre landlords can also be more flexible, says Brennan, citing their ability to cut a deal with a coveted tenant whose store will add value to the shopping centre as a whole.

“But for an isolated landlord on the high street, why on God’s earth should they take the pain for everybody else’s gain?”

But while Dundrum shopping centre may have bagged teen-magnet Hollister last year, Harrington says the high street is where premium brands will increasingly want to be. It’s a trend driven by the move to online shopping, he believes.

“An awful lot of retailers are taking flagship stores on Oxford Street, Bond Street and New Bond Street for example, which are no more than showcases,” he says.

He says while a spot in a prime suburban mall such as Dundrum would also fit the bill, it’s second- ary shopping malls that will suffer.

With better road and public transport networks, it’s also far easier for customers to travel to the major high streets or shopping malls than ever before.

“There’s a UK statistic that in 1971, retailers needed 200 shops to access half the shoppers in the UK. Last year you needed just 20,” says Harrington.

“Retailers are gravitating back towards larger stores in prime locations . . . inevitably there will be some casualties in the secondary schemes.”

Though proponents of the high street will claim it’s there that the big brands want to pitch their landmark stores, it’s size that really matters, according to spokesperson for Dundrum shopping centre, Phil Reilly.

“I still think Grafton Street is a fantastic street. There is a great buzz, but the issue for retailers is that they haven’t been able to get the sizes they want.”

While Abercrombie Fitch is fitting out the 27,000sq ft former Habitat premises on College Green and Banana Republic has been sniffing around the large Richard Alan shop at the top of Grafton Street, big units on the country’s premier shopping street are in short supply.

While Dundrum has an existing planning consent to increase its size, as do Blanchardstown and Liffey Valley, some wonder if it can do so.

“Dundrum is in Nama, so the prospect of it being sold is probably higher than the others, and the prospect of it being extended is less likely,” says Harrington.

“The relative standing of Dundrum could, in the medium term, be under pressure from non-Nama schemes that do have planning permission,” he says.

Overall, it seems the war between high street and shopping centre is, for the moment, on ice.

“I’m sure both parties would like to have moved on,” says Harrington, “but I think there is what you could describe as a sort of a reluctant truce.”