Some traders on Grafton Street have had enough of high rents and are organising to resist the practice of upwards-only rent reviews, writes JACK FAGAN.
TRADERS IN Dublin’s Grafton Street are meeting today to lobby for an end to upwards-only rent reviews and to mount a co-ordinated campaign to persuade landlords to reduce rents during the present recession.
The move comes at a time when many stores are reporting a sharp decline in consumer spending as shoppers concerned about possible job losses stay away from the high streets.
The owners of some shopping centres are also complaining that an increasing number of traders have been defaulting on their rent since the beginning of the year. One shopping centre in the Dublin suburbs has only managed to collect 40 per cent of its rent roll in recent weeks.
The trading difficulties in Grafton Street are likely to be highlighted at today’s meeting which has been called by businessman John Corcoran who has been running a footwear chain for the past 30 years. In recent months he has been attempting to offload the lease of Korky’s footwear store at 47 Grafton Street without success.
Though leases on the street have sold for up to €1.45 million, demand for them has waned over the past six months because of excessively high rents and the increasing incursion by mobile phone shops, burger restaurants, cheap gift outlets and convenience stores.
Mr Corcoran says that, unfortunately, landlords allowed this to happen whereas they should have bought-in leases and carefully chosen the type of traders who would add value to the street and enhance the entire city as a tourist showcase. Mr Corcoran has been attempting without success to assign the lease of his premises, offering a reverse premium of €300,000 – and says he’s “open to offers”. His business, Korky’s, is paying a rent of €445,000 per annum for a building which has a trading area of 84sq m (900sq ft) and storage on three other floors.
Mr Corcoran has sought a 25 per cent discount on the rent from landlords Canada Life and, even if it is eventually granted, he says his business will “still be unprofitable but it will lighten the burden a little”. To get Canada Life’s attention, he says he paid only half the rent on January 1st but they still ignored his correspondence. He then paid the other half in February and, when they got the money, they did nothing.
“We did not pay them anything on April 1st and won’t be paying them until they at least agree to negotiate. They want five years audited accounts. We have sent them some and will be sending them the remainder,” says Corcoran.
He contends that many of the small shops on the street are over rented by about 50 per cent. When he first took over number 47, 14 years ago the rent was £95,000 (around €114,000); after five years it went up to €217,000; and five years later it was increased to €445,000.
He said that, since buying the building, Canada Life has not spent a shilling on it over the years – “they just sat on their ass and used it as a cash cow. We open seven days a week up to 7pm and still lose at least €200,000 on the shop.”
Maeve Harrington, marketing director of Canada Life, said they held significant property investments on behalf of pension funds and other investment clients. “We are charged with acting in the best interests of our policy and unit holders, many of which are pension holders.”
Ms Harrington said that property leasing comes with a long-term commitment. “We are conscious of the current difficult trading conditions and the impact on certain sectors in retail.”
She said a key characteristic of property as an asset for pension and life funds was the long term reliable, contractual stream of rental income. “The importance of reliable income from substantial investment of pension scheme funds in property requires a known framework within which landlords and tenants operate.”
