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
January 17, 2011 at 12:09 pm
Hi Philip,
I don’t know if you saw the Burger King court-determined rent recently (link below) which apparently set a rent of €76 psf which is probably in a reasonable range given the price of whoppers! But that is effectively a new rent.
You make the point about legacy rents which are now out of proportion with present economic circumstances. But given existing rental contracts, what do you propose as a solution? State intervention in contracts?
http://www.irishtimes.com/newspaper/commercialproperty/2010/1222/1224286069426.html
January 18, 2011 at 4:33 am
Thanks for the article about Burger King.
I agree that intervention is difficult. Two things come to mind though; perhaps a period of rate reduction or suspension in particular circumstances at the local level might ease the burden. Then, at the national level, perhaps a central fund used for subsidies or bridging loans until lease is due for renewal or can be renegotiated.
As with Carluccio’s last year, negotiation does seem to have worked in a few cases:
http://www.irishtimes.com/newspaper/finance/2011/0115/1224287577574.html
Philip
January 18, 2011 at 12:04 pm
Hi Philip,
Yes renegotiation does seem to have worked though patently not at Korky’s shoes despite the massive poster!
But what landlord in his right mind would release an established company from a lease with say, another 5 years to run, paying a rent twice that of the current market rent? If there is risk that the tenant will go bust then fine, it might be commercially worthwhile to offer a new lease now with a current market rent. But for established companies for whom liquidation is not an option, I would say landlords would be stupid to offer lower rents on leases with a considerable term extant. I note the legal precedent established in Dec 2009 that examinership companies can repudiate leases but again, that may not be an option open to many tenants.
And if rates are reduced then who will make up the shortfall in local authority finances? The taxpayer citizen?
It’s a conundrum, without easy answers I would think.
January 19, 2011 at 8:15 am
Whilst recognising that it is 400m away from Grafton Street, I see that Tesco has reportedly agreed a sub-€20 psf rent on what will be a Tesco Express store on Fleet Street in Temple Bar.
With rents like this, there will inevitably be a two-tier retail environment with old lease tenants withering and dying unless the unexpired lease term is minimal or the tenant has very deep pockets. And there will be the new lease tenants that can undercut and dominate. Is this the sort of competitive environment we want?
http://www.irishtimes.com/newspaper/commercialproperty/2011/0119/1224287850527.html
January 21, 2011 at 6:55 am
Fair points Namawinelake.
Regarding your last comment, it seems there already is a two-tier retail environment. I recall Jack Fagan of the Irish Times mentioning it a while back with particular reference to Grafton Street.
Philip
May 2, 2013 at 12:29 pm
[…] have commented on Grafton Street before (here and here), while also discussing Schemes of Special Planning Control (SSPC) and Architectural Conservation […]
October 16, 2013 at 7:44 pm
Reblogged this on Philip Lawton.