Rents tumble at Rathfarnham shopping centre
A BUSINESS consortium which owns Rathfarnham shopping centre in south Dublin is facing a substantial fall in its rental income after a group of tenants were granted a 40 per cent reduction in their rents.
Six traders with similar sized shops on the ground floor (111sq m/1,200sq ft) had their rents cut from €83,000 to €49,300 on the recommendation of arbitrator Peter Rowan of Lambert Smith Hampton following disagreements between the management and tenants.
The rents had been due to be reviewed in June 2011 under an unusual (but quite logical) condition in the lease which allowed them to be set at the open market values.
Five years earlier in 2006 during the boom, the rents had been increased from €63,000 to €83,000. Traders on the first floor of the centre, who now pay an average rent of €22,500 per unit, will also have the option of availing of a similar clause in their lease to have their rents reduced.
Other tenants on the ground floor have also indicated that they will be looking for rent reductions in the coming weeks. These include EBS and Bank of Ireland; the bank’s lease has apparently run out. Most of the 28 leases in the centre are due to expire in 2015.
Traders who will immediately benefit from the lower rents are Ashley Reeves, John Cahill Menswear, Bolands Hardware, Wilson Butchers, Paper Lane newsagents and Blue Star Cleaners. Most or all of the traders on the first floor of the centre trade under similar leases.
Anchor tenants Tesco and Penneys both lease their stores in the centre which was developed by the late hotelier PV Doyle in 1967 – two years after Stillorgan shopping centre opened for business.
Michael Turley of Turley Associates, who represented most of the tenants, said that with a significant fall-off in consumer spending in recent years, the traders had no option but to press for a reduction in the rents at the centre. “The arbitrator’s findings underline the fact that the traders were entitled to a significant cut in the rents being charged,” he said.
James Dunphy of McNally Handy, who acts for the owners of the shopping centre, described the awards to the six tenants on the ground floor as “an arbitrator’s opinion on the rent” having regard to the evidence provided and the subject leases. They were presently in discussions with other tenants at the centre.
He said Rathfarnham remained a “well positioned shopping centre”which had managed to maintain full occupancy during the past six difficult years.
The owners were committed to the success of the centre and were due to lodge a planning application in October for the refurbishment and upgrading of it.
Anchor tenant Tesco had already underlined its commitment and confidence in the centre by completing a €3 million refurbishment of its store in the past 12 months.