With traders on the street agitating for lower rents, the David Daly-owned shop occupied by Wallis has had its rent upped from €530,000 to €787,000, writes JACK FAGAN.
WITH TRADERS on Dublin’s Grafton Street due to launch a campaign today to persuade landlords to agree to a reduction in rents, the owner of the Wallis store has just been awarded a rent increase of 48.5 per cent.
Property developer David Daly, who owns the building occupied by the UK fashion trader near the bottom of the street, had earlier been awarded a rise of only 2.5 per cent on the rent of the adjoining River Island store which he also owns.
Traders on the street are to press for an end to upwards-only rent reviews, as well as an immediate cut in rents, because of the fall off in consumer spending on Dublin’s main high street.
Mr Daly bought the River Island and Wallis retail investments at the peak of the property boom in September 2007 for around €115 million.
An arbitrator, John McCann of BNP Paribas Real Estate, has recommended that the rent of the Wallis store should be increased from €530,000 to €787,000. It has a floor area of 641sq m (6,900sq ft), including a retail space of 160sq m (1,724sq ft) on the ground floor and 139sq m (1,500sq ft) in the basement. The new Zone A rent will work out at €878 per sq m (€81.5 per sq ft).
The overall rent on the River Island store has been increased by €52,500 to €2,152,500. The fact that the same arbitrator awarded a rent increase at all will come as a surprise to some, as River Island was already paying the highest Zone A rent on the street – €13,751 per sq m (€1,275 per sq ft) compared to an average of €9,418 per sq m (€875 per sq ft) on the street.
However, the arbitrator’s award was based on an overall rate per square metre rather than zone-based. “The higher rent set reflects the unique nature of the property,” according to David Potter of Savills who represents Mr Daly.
River Island is acknowledged as one of the finest stores on the street with a large retail floorplate – the ground floor alone extends to 321.4sq m (3,460sq ft). The rent reviews on both River Island and Wallis had been overdue since August 2008.
David Potter, director of Savills’ retail department, said the two reviews were the last hanging over since 2008 and he expected rents on Grafton Street to be materially different in 2009. This would be clarified by an open market transaction in the second half of the year.
Already the tone on the street had changed and he expects Zone A rents to fall back from their present value of €9,418 per sq m (€875 per sq ft) for a standard sized shop. He says that, while there is a considerable number of shop leases available on the street, they were primarily on the small side. Once a larger store became available “you will see a bigger rental gap between the small shops and the big shops”.
The revised rent roll going to Mr Daly after the completion of the reviews will give him an overall return of about 3 per cent from River Island and Wallis.
This will still be only half the yield now being offered with the sale of the recently opened Tommy Hilfiger store on the opposite side of Grafton Street.
An overseas institution is in negotiations to purchase the store from Marks Spencer which developed it on the site of the original Grafton Street Arcade.
It is likely to sell for over €25 million.
The investment was first offered for sale last November through Colm Luddy of CB Richard Ellis. The decision by the British multiple to sell on the building has been prompted by their continuing roll out of new stores here.
