Dunnes may rent out Grafton Street store

The supermarket chain could expect to rent its Grafton Street store for well over €1 million a year should it opt to close the shop after 14 years.

DUNNES STORES has refused to comment on reports that it may be planning to close down its long running store on Dublin's Grafton Street with the intention of leasing the building to another trader.

Although no formal offer has yet been made to Dunnes, it is understood that the management has indicated its willingness to consider any serious approach for the well located premises near the top of Grafton Street. In the past Dunnes has consistently rebuffed any offers for the store which adjoins Laura Ashley.

With rents on Grafton Street now the fourth most expensive in Europe, Dunnes could expect to rent its building for well in excess of €1 million a year.

The double fronted property has three retail floors with more than 185.8sq m (2,000sq ft) at street level. The shop specialises in fashion goods by Savida.

Two years ago another fashion house Karen Millen agreed a rent of €1.05 million for 72 Grafton Street which does not have the same high profile or configuration as Dunnes Stores's shop.

Dunnes opened in Grafton Street in 1994 when it took over the Cassidy's group of shops in the city.

A retail expert said yesterday that a small boutique shop like the one in Grafton Street was the wrong format for a major supermarket group that specialised in stores over 6,038sq m (65,000sq ft). "Grafton Street can only be a distraction from their main business," he said.

The company operates a major store in the nearby St Stephen's Green shopping centre and also has a highly successful food outlet in South Great George's Street.

Dunnes is also understood to be planning to sell a number of small retail buildings in the provinces which they vacated in recent years.

There are currently about eight leases for sale on Grafton Street - the largest number for many years - including the ICS Mortgage Store at the bottom of the street adjoining Nassau Street. This tiny unit has a floor area of only 26sq m (280sq ft) at street level and overhead offices. The current rent of €150,000 is expected to rise to about €275,000.

Because of the difficulty of assigning leases on the street, agent Quinn Agnew is the first to offer a reverse premium of €100,000 for traders willing to take over Korky's shoe shop at 47 Grafton Street. A few months ago the agency was looking for a premium of €100,000 for the same lease.

Also on the street, Zerep shoes has reduced the asking price for key money from €500,000 to €150,000. The rent in this case is €336,000. The penny has also dropped for O'Briens sandwich bar which is seeking a premium of only €50,000 for its 33.5sq m (361sq ft) coffee shop. Its rent is a formidable €193,000.

The rush by traders to get out of Grafton Street underlines the serious cutbacks in consumer spending and, more especially, the unsustainable rent increases that have emerged in the last two years. It can't go on.