Grafton Street home to Swatch shop for sale for €4.25m

UK company’s 40-year lease due to expire in 2020, producing rent below current rates

The ongoing demand by private investors for prime retail properties should ensure an early sale of a well-located shop at the southern end of Dublin's Grafton Street.

Ann Hargaden and Christopher Belton of Lisney are quoting €4.25 million for the ground floor and basement of No 55 Grafton Street, which is rented by the Swatch Group UK on a 40-year lease from the end of 1980.

The property produces a rental income of €180,000 a year, reflecting a Zone A rent of €6,135 per sq m (€570/sq ft). This is well below the headline rates set in recent lettings, which have varied between €6,566 and €6,997 per sq m (€610-€650/sq ft). Based on current rental values, a purchaser could expect the Swatch shop to bring in an annual rent of €200,000, reflecting a return of 4.3 per cent after costs. The current lease is due to run out in December 2020.

The Lisney Retail Index has shown that prime rents on Grafton Street have increased by 5.5 per cent in the 12 months to the end of March, but this is still 69 per cent below their peak levels reached in 2007.

The Swatch Shop has a ground floor retail area of 38.71sq m (417sq ft) and basement storage of 24.7sq m (266sq ft). The company makes and sells finished watches, jewellery and watch movements.

The floor above the shop is separately owned and occupied by a hairdressing business with access in an adjoining building.

No 55 may be of interest to Irish Life, which is by far the largest owner of buildings on Grafton Street. Last December it purchased its 19th retail property, the Molton Brown store, for a figure in excess of the €9 million guide.

The net initial yield is believed to be only 2.81 per cent, but the investment has highly reversionary potential in the run up to the next rent review in October 2019.

Elsewhere on the street, Irish Life recently agreed a rent of €7,000 per sq m for No 32, which has a floor area of 207sq m (2,228sq ft) and is to be leased to the Australian stationary sensation Smiggle. The rentin this case will be €275,000.

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