Recent attention to the closure, followed by re-opening, of Carluccio’s (Which itself had only recently replaced the long-established Graham O’Sullivan’s) on Dawson Street in Dublin raises a number of interesting issues regarding city centre rents, recent planning practices, and attitudes to retail trade amongst a number of bodies within Dublin city centre.
- Brown Thomas Display, Wicklow Street, Dublin 2008. Photo by Philip Lawton
Throughout the boom years a number of prime retail areas in the city centre were designated by Dublin City Council as Architectural Conservation Areas (ACA’s), and, directly connected to this, Schemes of Special Planning Control (SSPC) (An area had to be designated as an ACA in order to become a SSPC). While seeming somewhat innocuous in their own right, there was a particular rational for so many retail areas to be designated as such. A primary aim of a Scheme of Special Planning Control is to remove what are perceived as ‘undesirable uses’ (fast food outlets, convenience stores) and attain ‘Higher Value Uses’, or ‘niche’ shopping, in an area. Furthermore, such uses, it is perceived, will then attract higher rents, and higher land values which would support more of the same higher end uses. However, in reality, prior to the bust, it seemed it was those stores that were best able to pay higher rents that remained in an area where land values were going up. This, somewhat ironically, includes fast-food outlets, such as McDonalds and Burger King.
While the above connections may seem slightly tentative, the introduction of the Business Improvement Districts (BIDs) model to Dublin is more explicit in terms of the connection between the re-ordering and increased control of urban space and higher land-values. Just over a year and a half ago, the designation of much of the city centre area as a BID was heralded for its ability “to increase footfall, decrease crime, increase property values and overall trading performance.” Therefore, it must be assumed that the potential for higher rent generation is also perceived as one of the positive outcomes of the BID. Given that the Dublin City Business Association was directly involved with, and lobbied for the introduction of, the BID, it must also be assumed that they were also in favour of higher rents. Now, as illustrated by recent reports, and despite the removal of upward only rent reviews, city centre retailers, such as the owner of Korky’s shoe store on Grafton Street, are becoming increasingly worried about the impact of the retention of higher rents that they cannot afford on the future viability of their business.
If it is these high rental values which are now turning out to be the nemesis of the viability of trading in the city centre, the question must be asked as to why higher land-values were heralded as one of the positive outcomes of the BID mechanism. It seems that the desire for more up-market land-uses only ads to an already existing cycle of unsustainable rent increases, which in turn, as evidenced by the growing number of empty units on streets such as Grafton Street, leads to vacancy.
Philip Lawton
- The recently closed West Jewellers on the corner of Grafton Street and South Anne Street with another vacant retail premises in the background. Photo by Philip Lawton, 2010
Ireland after NAMA 
February 23, 2010 at 10:18 am
Grafton Street, someone said, has been going down hill ever since it became possible to eat there without using a fork. Although Korky’s shoeshop is an interesting example of the pain being suffered by retailers I would draw your attention to the arbitration that took place in respect of the Bus Stop on Grafton Street in January 2010 which resulted in a significant INCREASE in rent.
http://www.irishtimes.com/newspaper/commercialproperty/2010/0127/1224263197209.html
Also I am at a loss to understand the economics of being the landlord of Carluccio’s. The property was apparently bought for €20m in December 2006 and the old rent which the restaurant group said was uneconomic was €680k per annum which is understood to have been reduced in order to prevent Carluccio’s from vacating. So something probably substantially less than a simple yield of 3.4%.
February 23, 2010 at 10:26 am
Thanks for that. I find it amazing that some rents are still going up. For example, the article I linked at the bottom of the blog discusses the probability of a rent increase for Boodles on Grafton Street.
Philip
http://www.irishtimes.com/newspaper/commercialproperty/2010/0217/1224264612203.html
February 23, 2010 at 1:13 pm
Or is it that commercial and retail land values (and hence rents) are increasing because the yields are not there from pension funds and other institutional sources of income?
February 23, 2010 at 1:36 pm
Surely it is rents that drive land values. If those rents cannot be met you would think land values will go down? Of course if there is still interest from high-profile outlets, such as in the Boodles example, we lose the smaller independent outlets.
Philip
February 23, 2010 at 2:34 pm
Now, now, Philip, you’re in danger of being at odds with Finance Minister, Brian Lenihan, who in September 2009 was calling the bottom of the market because yields were at record highs! [the logic being that everyone would pile into high yielding property pushing up property values and restoring an equilibrium of more traditional yields]. Mr Lenihan is an accomplished barrister who has had to take a crash course in crash economics but maybe now he understands that if yields are at record highs and more than available in other asset classes, two things can happen – asset prices can increase through increased demand or the yield (in this case rent effectively) can drop and there are many (the majority I’d suggest) who believe rents have and will continue to come down – yes you may get some rent increases and much squeeling from retailers but as your photographs of Grafton Street demonstrate, you may simply get vacated property and in my opinion confidential rent agreements (eg Carluccio’s new agreement).
March 2, 2010 at 6:11 pm
Philip,
Despite selected rent increases including one arbitrated increase, plainly many retailers are very unhappy with the rents on Grafton Street according to an article in today’s Irish Independent.
http://www.independent.ie/business/commercial-property/high-rents-threaten-grafton-street-shops-2085243.html
March 3, 2010 at 9:25 am
Thanks for sending that link Namawinelake.
Yeah, a few more To Let signs have appeared on the street in the last few days.
Philip
March 5, 2010 at 8:47 pm
If you have the photographs that would be interesting. As a quid pro quo I am in London this week and will take a look at Bond Street/New Bond Street over the weekend (oft cited as London equivalents of Grafton Street) and will send photographs of any vacant units.
March 7, 2010 at 12:13 pm
I took a stroll down Bond Street yesterday and you can see the 70-odd photographs and commentary here:
March 5, 2010 at 8:43 am
[…] down Grafton Street recently? There are a fair few empty premises as it is. Seen this photo? The Retail Sector, Business Improvement Districts and Increasing Rents Ireland after NAMA __________________ To view links or images in signatures your post count must be 10 or greater. […]
March 5, 2010 at 12:41 pm
Grafton St has many serious problems, and BIDS as a concept is something I worry about. BIDS at core has more to do with paying for the Christmas lights than anything else.
You say that because a group of traders want to improve their local district, that therefore we can assume that they are in favour of higher rents as a matter of principle. This just does not follow. It does not tally at all with the reality of life running a business around Grafton St.
For Grafton St to be put back on the right track, traders, landowners and the local authority are going to have to work together to build new value, and in a radically more expansive way than BIDS. An example is what was done in London, driven mainly by landowners.
http://www.newwestend.com/developments/orb_action_plan
March 6, 2010 at 6:59 pm
Hi Antoin,
You raise an interesting point about the traders and the BID. ie, the traders were in favour of the introduction of the BID. I am not trying to say that all traders are inherently interested in higher rents and use the BID as a method of achieving this. However, it is perhaps in the interest of some of the more powerful retailers and property owners in Dublin to remove what is referred to as ‘undesirable uses’. what these uses are and why an area is then ‘better’ is highly subjective. So, while most of the traders are in favour of the introduction of a BID, some of them might find that it is that same mechanism which now causes them to have to leave. However, that is assuming that a city centre continues to prosper and does not take an economic downturn into account. In this case the fact that retailers are leaving is highlighted by the fact that no-one is taking their place. The question therefore does not change for me. ie, why would the increase in land prices be seen as a positive aspect of the introduction of the BID.
March 7, 2010 at 12:37 pm
[…] is a response to an article that appears on the irelandafterNAMA blog. Possibly related posts: (automatically generated)English coursework piece: A walk in LondonRobbery […]
March 7, 2010 at 4:55 pm
The idea is simple – that the stakeholders in a community would want to work together to improve their area, so improving life and business for themselves and the visitors that they depend on to buy stuff and thereby pay bills. This is what BID is all about. (Obviously, if the area is improved in this way, it will result in higher property values and rents – but what’s wrong with that?)
What does BID have to do with ‘undesirable uses’ (convenience stores/mobile phone shops/etc)? These are two completely separate issues. One has to do with day-to-day operations of the street, the other has to do with long-term planning.
The only way they are connected at all is that they both relate to improving the quality of a neighbourhood and building value. This is about developing sustainable long-term value and has nothing to do with blowing up the rent bubble. Neither BID nor planning of use has anything much to do with the bubble in rents.
March 7, 2010 at 10:27 pm
Hi Antoin,
I am away at the moment and will respond to your comment in more detail when back. however, I have not said that the BID or any of the other schemes in the city centre are connected to the bubble. I am merely questioning the logic that increasing rents in the city centre are positive. Whether during a boom or not.
March 8, 2010 at 9:44 am
Well now we are going to talk about the difference between ‘long term economic value’ and ‘market value’! Increasing the long term economic value of property is a good thing, I would say.
March 15, 2010 at 1:35 pm
Hi Antoin,
BID’s are not just a matter of improving the environment for retailers in an area. Research by Sharon Zukin in the U.S, and Ian R. Cook in the U.K (amongst others) has illustrated the highly complex nature of BID’s and their direct relationship to property interests, the private control of the provision of services, and the domination of the more powerful business elites in a city area. For example, recently, Zukin (Naked City: The Death and Life of Authentic Urban Places) has illustrated how in the long-run the smaller independent retailers lose out to the larger more powerful interests in an area that is designated as a Business Improvement District. So, while the broader retailing community in the city centre might be in favour of improvements to their environment, those same improvements can lead to displacement of those very people that voted for the introduction of a BID in the first place.
In reference to your mention of long-term and short-term economic value, it should be born in mind that the notion that long-term economic values are upwards only is one of the core issues with processes like this. Both Schemes of Special Planning Control and BID’s are not about sustainable increases in property values, but are outcomes of an ideology that sees market forces as delivering a positive outcome in a city (It is no coincidence that they emerged when they did). So while both the BID and Schemes of Special Planning Control did not cause a property bubble, they (and particularly the BID, as illustrated by international research) are inherently connected to each other and the desire for constant growth. They are not just about the long term planning and delivery of day-to-day services as separate activities.
In summary, there are two ways of looking at this;
(A) The reality of the current situation illustrates the shortcomings in heralding increased rents as a positive aspect of both the Scheme of Special Planning Control and the BID. It does not say they have led to them, but points to the short-comings of assuming that there will be a constant increase in rents and land-values.
(B) Even if economic growth had continued, the displacement of smaller businesses (as illustrated elsewhere) is a questionable element of mechanisms such as the BID and the Scheme of Special Planning Control.
http://www.brooklyn.cuny.edu/pub/Faculty_Details5.jsp?faculty=420
http://usj.sagepub.com/cgi/reprint/45/4/773
March 23, 2010 at 11:13 pm
I think you are confusing value and price. You can push up the value of property without pushing up the price (and vice versa). This is all about building value.
There is nothing inherently wrong with increased rents, if there is the trade and margins to support the rents.
As you say, rent increases are not always sustainable in this way, and that is not going to work. But rent increases are more likely to be sustainable if there is coordinated action.
What is the alternative that you see? Do you think that traders should avoid working together to improve their local environment?
As I say, I am not a ‘fan’ of BIDS as a bottom-up operation. It is run stupidly in Dublin and has no top-down plan that I can see (as the project in London ORB has).
However, the city has to move on. Progress is not inevitable, but it is desirable. Does progress sometimes mean you will lose the old traders? Yes for sure, because they just aren’t up to snuff in the new environment which is getting more competitive and tough. Does it mean you will only have multiples and generic shops? No, because it is not to anyone’s advantages to be dominated by these. To make the area work, the landlords have to bring about an appropriate mix of shops.
I am a little puzzled about your view of cities. Cities are primarily economic entities. They are also social and cultural, but those are secondary aspects. This is not palatable, but it is true. The reason for this is that cities emerge from commerce in the first place, they are expensive to build and they need to be relentlessly regenerated. Any plan for a city that does not have economic development as the key component is going to end up as a very unhappy place.
March 24, 2010 at 9:22 am
Agreed regarding the economic component (not forgetting the social aspect of economic forces). However, if you are to rely solely on consumption as an economic driver, the city would soon be in a lot of difficulty. Therefore, I don’t really see it as being a key issue here.
Change is inevitable. However, any policies that are introduced into a retail environment should be thought about in a clear manner, with particular focus on what the negative impacts might be. It is not about being against the improvement or upgrading of an area, but understanding what this might do in the long-run as well as understanding the power-relations behind such structures.
Your desire for more top-down structures worries me. It simply gives more power to the larger and more powerful entities such as large property owners and the larger retailers. This is made very clear in your London Orb example:
http://www.newwestend.com/company/board_and_governance/strategic_board
March 24, 2010 at 11:25 am
What’s wrong with it? The large property owners are ultimately the ones who own the property and who have the biggest economic stake in it. They are also the only ones who can control who becomes a tenant on the street.
It is always realistically going to be up to the big players to drive overall development in a city. What other structure would you propose?
They tried it the other way too – with small groupings and everything under the auspices of the borough council. That just didn’t work. Everything went to hell. Ultimately, was that these governance arrangements just couldn’t compete with out-of-town shopping centre experiences.
March 24, 2010 at 12:35 pm
If we are talking about retail alone, then obviously the question eventually comes down to the relationship between landlord, retailer and consumer. The problem is that it is the smaller retailers that are currently losing out (struggling if not closing, due in a large part to rent increases they cannot afford). Thus, the domination of larger property companies ala your London Orb example cannot be seen as being a positive solution for the current issues facing the broader spectrum of retailers in Dublin.
If these structures are really there to protect the interests of the wider spectrum of retailers in a city, then the smaller retailers should also have a greater voice. Furthermore, given the complexities of a city (compared to a shopping centre) I would go further and suggest that a number of different voices are heard under the auspices of the City Council. I would also include, for example, community groups and residents in this.
While on one hand cities are economic entities, there is a duty of care that we share to ensure that they are not dominated by one particular interest group (The impacts of this on the broader country in recent years are pretty evident). That is what makes cities so much more viable in the long-term than shopping centres. Proper planning as opposed to the domination of specific interests helps this.
You seem quite determined to take these issues at face value and ignore what their impacts might actually be beyond street improvements. You also seem to be determined to ignore the fact that retailers are struggling in the current environment. Going back to my original post, I questioned why increased rents were automatically perceived as being a positive aspect of the BID (As stated on the BID website). The City Council, along with DCBA and the BID itself are now also beginning to re-examine this (see link below). While the BID board is dominated predominantly by larger retailers, I would hope that they will use their clout to protect the broad range of retailers in the city.
http://emercostello.blogspot.com/
March 24, 2010 at 2:05 pm
The problem is that city centres are not necessarily more sustainable than shopping centres. At the moment, the city centre is dying slowly, whilst shopping centres are flourishing.
You may think I am taking things at face value, but you are going well beyond the facts and inferring something that there is no evidence of. I am not saying you are wrong, but all you have for evidence of your belief that BIDS jacks up rents is three words from an old press release.
Just as BIDS’ purpose is not to jack up rents, BIDS is not supposed to protect the interests of retailers either. That is the job of DCBA, but not BIDS.
In the Grafton St area, there are relatively few residents and hardly any freeholders. The main community groups (church and education) are backed by substantial landowners.
It is all very well to talk about community involvement in the sense you talk about it, but it just doesn’t work in a situation like this, that is primarily commercial. You won’t get the critical mass of investment required to sustain a vibrant city centre. You will end up with something like Dun Laoghaire town centre.
The upward-only issue is another example of an issue where landlords have failed to act in the interests of the area and in their own long-term interests, because of lack of knowledge and coordination. That is my point. The Crown Estate would not go around Oxford St jacking up rents during a recession.
The press release you link to about upward only rents is just hollow PR. BIDS does not have any landlord representation or even partnerships – it is comprised solely of leaseholders and local state agencies -. It has nothing whatsoever to do with the negotiation of rents.
March 24, 2010 at 3:29 pm
Hi Antoin,
I don’t think you are right about BIDs not being there to serve the interests of the Retailers. This is outlined as one of their primary aims. That was why I questioned the promotion of higher land values in the original press-release (Which was not about rent negotiation but more about international experience of the impact of BIDs).
Regarding residential presence in the city, the BID covers a far greater area than just Grafton Street. Take Parnell Street as an example. Furthermore, those people living in the surrounding area that is not within the remit of the BID also have an interest in the city centre more generally. I don’t think we can compare the city centre to Dun Laoghaire though, the scales are too different. The idea of ‘critical mass’ is probably valid in as much as city centres survive on the possibility of different people using it for various reasons, which includes a wide array of retail choices amongst other things.
Yes, it would be too early to state that the BID inflated prices in the city centre. However, it is still possible to question the logic of such a premise based on international research. I feel our discussion moved on from my initial questioning of the logic of desiring increased rents to a wider discussion of the processes of BIDs, followed by the furthering of private interests through the example of the London Orb.
In general, I would argue that a greater level of thought needs to be put into protecting retailers given the current situation. I would also argue that it should not be up to those with property interests to implement this in and of their own. Given recent experience it is extremely dangerous to assume that such interests will result in a balanced and positive outcome for the city. I think the up-coming negotiation between City Council/BID/DCBA and land holders will be interesting in this regard.
March 26, 2010 at 1:53 pm
I didn’t say they weren’t there to serve the interests of retailers. I said they were not there to ‘protect the retailers’. It’s a very different thing! I don’t know what BIDS could do on this score and I really don’t think it would be appropriate.
I do not think that people who profit from owning shops and own retail property and get rents from it and so make money from it should be subsidised by having the State step in to to upgrade the value of their property. The property owners really should be shouldering the lion’s share of the cost and effort. Obvously, retail trading causes disruption and inconvenience for residents and this is a serious matter that has to be considered.
Why is Dun Laoghaire not relevant? It is an example of a thriving retail area which has gone downhill, despite strong economic conditions. There is no reason why the same thing could not happen in Grafton St. In fact, it appears to me that this actually is happening.
March 26, 2010 at 3:26 pm
Hi Antoin,
Your use of the term ‘protect the interests of’ is loose and could be interpreted in a number of ways. Is the BID there to help if a business is struggling to pay its rent? No (Although acording to that link I posted a few responses ago, they might now get involved in the ongoing rent issue). However, is it there to protect the broader interests of retailing in the city centre? Yes. If you look a little further in to this you will also see that the DCBA and the BIDS are very closely intertwined (DCBA were one of the lead lobbyists for the BIDS etc.).
It is not about whether or not the state should fund the upkeep of the city centre or not. Anyway, the investment in the public realm by a city council should be more about retaining a balanced retail environment, in the context of other activities in a city centre, and not about the whims of property investment, should it not? Furthermore, don’t forget that the bid levy is on top of rates that are already being paid. Your comment about who should pay for the up-keep of streets does remind me of one of the contradictions of the BID model though. Namely (as discussed in relation to Zukin’s work above) regarding the payment of rates by smaller retailers only to see the long-term impact of the BID resulting in their having to close or move.
If we are to talk about towns suffering due to out of town retail then of course there is a comparison between Dun Laoghaire and the city centre, as well as countless other towns around the country. However, I am not following your logic about Dun Laoghaire and Grafton Street. Certainly, Dundrum had a significant impact on Dun Laoghaire. It would also be incorrect for me to claim that it has not had an impact on the city centre aswell. However, it is only since the bust and the continued hike in rents that Grafton Street has struggled in terms of vacancy. Surely, above all else, it is the search for such increases that is Grafton Streets main problem at the moment.
Philip
March 30, 2010 at 12:27 pm
Almost, but it is not quite as simple as that. You have to look deeper.
Grafton St has not seen rental voids until 2009, but the opinion of many of at least some traders has been that the street has been in serious decline since 2004, and possibly for longer.
The mix of shops on the street is not conducive to a high-class shopping area (or any kind of shopping area really). As you say, rents were madly high on the street and this meant that it was only attractive to the highest-volume-and-gross-margin businesses – clothes multiples and mobile phone shops. There is nothing exclusive or high-end or otherwise distinctive about the street and hasn’t been for about five years. Brown Thomas and maybe Weir’s is the only thing left and they are also losing their distinctiveness. This is and was close to the heart of the problem.
We cannot expect the markets alone to bring about a solution. The inevitable lower rents are not (alone) the solution. The planning restrictions on the street have not done much good either (though they might have halted the decline at the very end).
The solution is to manage the mix better to make an attractive, distinctive experience. To do that requires the landlords to work together with a common plan, which then takes in the other parties. BIDS can’t do that, and neither can the City Council, acting in isolation. The reason for landlords to invest in the plan is to increase the value of the area (in the most sustainable, long-term sense).
(Lastly, ‘protect the interests’ was your language, not mine! And when I talked about responsibility for funding, I was not talking about upkeep. Rather, I was talking about upgrading the area – replanning it, rebuilding it, etc. -. )
March 30, 2010 at 1:16 pm
Antoin, perhaps we have got a bit lost in translation in that case. However, as I stated before, the official function of a BID is to protect the interests of retailers, in the wider sense of the idea. That was the manner in which I originally used the term.
One of the positive things about Grafton street is that it is not a ‘high-class shopping area’ which is exclusively aimed at one section of society. This is exactly the problem of allowing landlords to dominate what the ‘mix’ should be.
March 30, 2010 at 2:28 pm
This is not the function of BID. The vison of BID is described at http://www.dublincitybid.ie/about-us.html
I never said that it should be aimed at one section of society. However, the objectives for the street in the planning control scheme direct it towards being a street where shops sell exclusive things, particularly clothes, that you will travel a distance in order to see and buy. (http://www.dublincity.ie/SiteCollectionDocuments/grafton_street_planning_control_scheme.pdf) The new draft development plan refers to the area’s potential as a ‘high fashion area’.
I am sorry, I cannot see anything much positive about the mix of shops on Grafton Street, other than if I am looking to buy a mobile phone or am with a young woman who is looking to buy moderately priced clothing. It is just another shopping street, with the same stuff as all the shopping centres. There is nothing special or distinctive about it. The pokey shop sizes mean it is not even much good as a shopping centre.
I see Brown Thomas, Switzers, Bewleys, FX Kelly’s, Pia Bang and so on as the core of what Grafton St is supposed to be about, and you see something else. It is not that I think these uses are inherently any better or morally superior or even more profitable than selling vegetables from a stall, servicing mobile phones or a chinese health clinic, it’s just that this is what Grafton St is traditionally all about. In the marketing lingo, it’s the ‘positioning’
What do you see?
March 30, 2010 at 4:27 pm
Hi Antoin,
It is interesting how we see this in such different ways. For example, take the initial quote in the link you posted:
“The Dublin City Business Improvement District is a not-for-profit organisation that works, on behalf of its members, to create an attractive, welcoming, vibrant and economically successful BID area.”
Here I see the importance of the fact that the BID works on behalf of its members, which includes all retailers it represents. Perhaps this misunderstanding is a result of me using the word ‘protect’. However, I feel it was pretty clear as to what I meant originally.
The way I see it is that there is an inherent problem in thinking that Grafton Street is supposed to be about something in particular. I would of course see Brown Thomas and the former Switzers etc. as forming an important element of the history of Grafton Street, but I would also think that there are positive elements of many of the other shops/outlets that are presently there.
This brings me on to your question of what I see on Grafton Street; I see a mix of shops such as Weir opposite McDonalds, the small shop and cafe called The Loft about halfway down the street opposite Boodles and next the recently closed West. I see HMV and Korkies shoe shop. Yes, there is vacancy, but the street is representative of the types of shops used by a wide selection of society. Add to this the wide array of buskers and performers (which in fairness both the DCBA and the BID see as positive elements) and the mix of people that bring the street to life.
Then I start to think would this still be here if the street was transformed, such as in the manner proposed by the Scheme of Special Planning Control. I am not saying that these changes would necessarily transform the whole nature of the street, but I am suggesting that the dynamic is thought about very carefully instead of simply disregarding certain elements. For me the value of a street such as this is the mixture of these uses and the different people who use it, along with the gradual way in which it evolves.
I know you feel that a grouping of landlords will help to control rent increases etc., and work towards a better mix of shops, but I think this places too much faith in something that is primarily driven by property investment. Taking this to its logical conclusion, retailers would have no choice regarding their presence and retailing would be completely dictated by property investors (at least those retailers who rent their premisis as oppossed to those who own it), which are themselves dictated by forces which are largely outside their control. This does not necessarily lead to a better situation for Grafton Street or the city centre more generally.
Philip
March 30, 2010 at 7:42 pm
If you like Grafton St the way it is, fair enough.Maybe there is a space for streets like that. But it is not sustainable. It has no future. It is fighting directly against the out of town shopping centres and it is rapidly losing. HMV will leave Grafton St soon (for macro reasons as well as local reasons). Boodles will leave too, because they will not put up with paying top-dollar for a location that is allowed to become filthy and unkempt with the pathway blocked. Korkies has checked out. Eventually, Brown Thomas and Weirs will leave too, if they can get a better setup in the revamped Henry St/Carlton development.
Property investors have always dictated retail, certainly in the busy retail areas. Retailers have always to get the approval of the landlords to open up and it has only become a purely economic, bidding-war transaction in more recent years. You could never just show up and open.
Retail areas do not just emerge (and you could say the same for many other types of development). They are carefully positioned, planned and executed. If you don’t do it properly, they will go wrong. Then the tenants will leave and rents will collapse. That’s what’s happening on Grafton St at the moment.
We have to start planning things (this goes for all aspects of our built environment, not just retail) rather than just hoping that things will work out ok.
March 31, 2010 at 8:03 am
Hi Antoin,
1: I would be very suprised if Brown Thomas and Weir leave Grafton Street in the near future. However, if it were to happen for the reasons you say, then, from a planning perspective, I think this would fundamentally question the logic of allowing the Carlton centre to go ahead in the first place at the expense of long-established streets.
2: It is not about whether or not retailers get permission to set up by landlords, it is about whether or not the landlord can dictate who remains.
3: As we have discussed already, and there is no need to go over again, that is not the main reason that tenants are currently leaving Grafton Street.
4: It is not a question of not planning, it is a question of balanced planning and taking on board the different factors and including the different actors (as stated in my last reply). The failures of the dominance of private actors within our planning system in the last two decades are now pretty obvious.
Philip
March 31, 2010 at 9:19 am
1. It would be wrong to hold back the O’Connell St area because the south core is failing to perform.
2. This is splitting hairs on who controls what’s on the street.
3. You mean the rent? It’s not rent alone. Grafton St is much deeper trouble than Henry St where rents are also extremely high. Rents are also high in Dundrum S/C but it is thriving. Rents are through the floor in the bourgois suburb of Dun Laoghaire, and the head shop is probably the best looking thing on the street.
4. For sure, as long as the balance is appropriate and the street is left with a sustainable positioning (as outlined in the current draft development plan). Just allowing any old high-margin business to open up will not do.
March 31, 2010 at 9:32 am
1: From a planning perspective, that is a flawed way to look at the city centre. They are both reliant on each other.
2: The issue of control is a key factor here. The city should not be dominated by one sector that already has a considerable amount of power.
3: Practically every article written about tenants leaving Grafton Street in the last year has highlighted rent as the primary factor (Do you have figures to hand regarding rents in the areas you mention?)
4: Perhaps, but this will not be achieved by a model that is dominated by propety investors and, as in the case of your London Orb example, department stores. As you say, it is about balance.
April 1, 2010 at 9:30 am
1. That should be how it works, but if you don’t have a distinctive positioning for the different areas (for example – Grafton St as the high end, O’Connell St for quality homeware, etc) then they will always just be in competition with each other, rather than being complementary.
2. I think is about stewardship and responsibility rather than power and domination. Landlords and tenants should live up to their responsibilities to maintain and develop their areas. The council should support them (and correct them where appropriate).
3. Sure – rents in Dundrum S/C http://www.irishtimes.com/newspaper/commercialproperty/2010/0303/1224265484904.html
They are looking for 4000/m, Zone A now.
Rents in Grafton St: http://www.irishtimes.com/newspaper/commercialproperty/2009/1021/1224257140308.html – 780-1200 euros/m Zone A (in fairness, this article seems to estimate rents as low. Certainly a lot of tenants are paying more than this, but it’s probably a good indicator of the rents that are available on the street now.)
Rent is certainly not the only issue on Grafton St – see this thread from 2005. http://www.archiseek.com/content/showthread.php?t=5308 . Obviously, it will be the issue that ulitmately causes businesses to go out of business.
See also http://www.colliersjs.com/news248.htm – Abercrombie wouldn’t move into Suffolk St because of the undesirable mix of shops on Grafton St.
4. Seems to be working fine around Oxford St/Regent St/Bond St. The area has seen major improvements in the last few years.
April 1, 2010 at 11:37 am
Those figures I have quoted above seem all over the place – the difference seems to be in what people are calling Zone-A. The shape of the shops in the two areas is very different. But you will be looking at 350k for a well-positioned 2000 sq ft shop in Dundrum Shopping Centre, and you will be looking at the same sort of ballpark price in Grafton St., maybe a bit less you will have less frontage, though you will also have more foot traffic)
April 1, 2010 at 12:12 pm
Taking into account the incoming rise of 60% in Dundrum, Jack Fagan of the Irish Times put zone A rents there at €4,000 per sq m.
http://www.irishtimes.com/newspaper/commercialproperty/2010/0303/1224265484904.html
In the last quarter of 2009 Cushman & Wakefield put Zone A rents on Grafton Street at €7,000 per sq m.
Click to access ireland_retail_4q09.pdf
April 1, 2010 at 11:35 pm
I read those articles too. The problem is that you can’t directly compare the zone A rents for two things which are fundamentally different. There is a much larger proportion of ‘A’ space in Dundrum Town Centre compared to Grafton St. This is because units in a shopping centre are wide and shallow, whist units in Grafton St are narrow, deep and tall. (See http://www.mybusinessrates.gov.uk/wales/valuation/check_details/retail_zones)
This highlights one of the big problems of Grafton St and why it is difficult for it to compete head-on with Dundrum, Henry St and Carlton. The shop units are not really suitable fpr the type of mainstream retailing that fits well in the Dundrum Town Centre or the new development on South King St.
If you want to rent 185 sq m of space, it will end up costing in the same ballpark in both locations.
April 2, 2010 at 8:42 am
That is more like Henry Street. Downward pressure on the market and removal of upward only rent reviews will bring rents down on Grafton Street. This will lead to less vacancy (This is something I am happy enough to wait and see if I am correct about).
April 2, 2010 at 6:39 pm
Rents have fallen, and will fall further, and other shops will move in, for sure, as the calendar shop and discount book store have, for instance. But these new tenants will do nothing to halt the decline of street as a premier shopping destination. Footfall will decline ever faster as the street goes further downhill.
The council will do what it can. I know of potential tenants who are ready to move into units but are being prevented by the local authority on planning grounds. But it is really hopeless.
April 3, 2010 at 3:10 pm
http://www.irishtimes.com/newspaper/weekend/2010/0403/1224267603904.html
Quote the owner of Korky’s shoe shop: “This should be our Bond Street, but the place feels utterly degraded,” he says. “You have too many convenience stores, fast-food outlets, mobile phone shops. This is in the middle of Georgian Dublin. It should be our most elegant street, but its lost its lustre,”
April 3, 2010 at 5:05 pm
Which he followed with the following:
“With the rent, its very hard to make money. Virtually everyone is on an upwards-only rent review, We pay €445,000 in rent. It’s crazy rent. And we’ve another €50,000 in rates on top of that. This street is an example of how the economy went bust. We got so disconnected from the real world. We thought the street was up there with Fifth Avenue. We believed the hype.”
April 3, 2010 at 10:02 pm
That applies to him, sure, but it doesn’t apply to the vacant units on the street. A new shop will not be paying rent anything like that.
April 6, 2010 at 8:19 am
Exactly. Which no doubt has had an influence on Compu B (Selling Apple Computers) locating at 111 (About to open) and the opening of the men’s accessory store, Dalvey’s at number 23 (Recently opened).
April 6, 2010 at 10:45 pm
Yes, it is certainly great to see that. I hope these companies have the backing to make this work, because this is a big investment for them. The Dalvey shop would need to sell upwards of one hundred items a day to make money, and CompuB will need to sell over 50 computers a day to make money. The investment and cashflow involved is phenomenal. (Obviously this is the same for any major retail enterprise, but these are tough numbers at a time like this.)
April 7, 2010 at 6:56 am
You’ve probably both seen the report in today’s Independent which gives some hard data on rents on Grafton Street which appear to be falling at an annualised 44% pa. I cringe when I consider how NAMA is valuing by reference to 30 November 2009.
http://www.independent.ie/business/commercial-property/grafton-street-rents-down-45pc-from-peak-2127524.html
April 7, 2010 at 11:55 am
Contrast that to the situation in Dundrum!
When you dig into it, the valuations are very ropey, because they are based on a very small number of comparisons or ‘comps’ as the valuers say. Essentially this means that there is no market to judge a market price off, because hardly anything is moving. Hardly anything moved at all in q4 so prices supposedly didn’t show a drop. Then they did in q1.
There is a further problem with comparisons on Grafton St. You can’t get a unit on Grafton St for a mobile phone shop for love or money at the moment (because the Council won’t allow any new ones). If you want to open a shoe shop, on the other hand, there are some great deals to be had!
Anyway, the question now is how we truly increase the value of property in all parts of Ireland. (I mean ‘value’ in the purest, most noble sense.) How do we upgrade the environment of the city as a whole so that it is genuinely a nicer place to live and work (and of course shop)?
July 24, 2010 at 12:36 am
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May 2, 2013 at 12:29 pm
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October 16, 2013 at 7:50 pm
Reblogged this on Philip Lawton.