Retailers struggle at St Stephen's Green centre

Shopping Centres: There is a record number of leases for sale at the St Stephen's Green shopping centre, writes Claire Shoesmith

As many as 10 leases are up for sale in the Stephen's Green shopping centre at the top of Grafton Street as traders struggle to cope with "unsustainably high" rents and declines in footfall.

According to one of the centre's retailers, whose own lease has been on the market for over a year, footfall in the centre has been slipping over the past two years despite the strong location of the centre at the top of Grafton Street. Over the past two years, rents have risen by 80-90 per cent.

In addition to the shopowners trying to sell their leases through retail agents, there are also six shops currently standing vacant within the centre, including the former site of Satellite Sports and Lu Lu Paris, an accessories store, on the ground floor.

"Rents are very high and business is not good," says Brian Mangan, owner of the Benetton franchise in the centre and chairman of the tenants association. "There are a number of premises that have been vacant for a while and there are a good few people keen to move out."

In January, retail agent HWBC put the lease for clothes outlet Tattoo up for sale at €100,000. The site remains unsold. Meanwhile, the centre's newest tenant, pharmacy chain Sam McAuley, paid a record €170,000 last July to open an outlet in the centre.

Stephen Murray, retail director at Jones Lang LaSalle, which manages the centre on behalf of its owners, Irish Life & Permanent and property investor Pierce Maloney, who owns the Bus Stop chain of newsagents, said there are "certainly a number of leases" for sale within the centre, but that it's nothing unusual for the market at the moment.

"With recent increases in rent there are more leases on the market generally now than there have been for some time," he says, admitting that this is also the case in the St Stephen's Green centre.

According to Murray, the situation isn't specific to that particular arcade. "Previously turnover of leases was very low, but what has happened is that more property has come on stream and now there is more choice and transparency for retailers," he says, adding that there are currently about six or seven leases being actively marketed on Grafton Street itself. "It's not unusual."

Murray says that five or six years ago you couldn't get a lease anywhere near Grafton Street for love nor money and, if you were lucky enough to get it for money, then you paid a very high price and signed up for at least five years.

"Things have changed," he says. They certainly have. Where Grafton Street was once a sought-after location for retailers, with a good city centre location keenly trodden by tourists, it has recently come in for increasing criticism because of its selection of tatty chain stores and its inordinate number of mobile phone shops.

It's understood that one of the only retail outfits to enquire about one of the units in the St Stephen's Green centre was mobile phone company Meteor.

Retailers generally accept that there are trading difficulties in the Grafton Street area, but those in the St Stephen's Green centre have become increasingly despondent because of the slippage in business. One outlet which has been there since the centre opened 18 years ago, even reported its first drop in sales in five years last year because of the decline in footfall. "This used to be a very good location but things have dropped off," said one retailer.

One particular issue of concern is the fact that, as was common in the past with commercial leases, many of the smaller retailers in the centre signed up for personal guarantee leases, whereby if the shop fails to pay the rent, they themselves are held liable for the full term of the lease unless they manage to sell it on. As a result of this, retailers are unable to wind up their businesses - even if they want to.

Mangan admits that this is nothing unusual, but does believe that the owners could do more to promote the centre.

"The landlord is not very proactive in promoting the centre," he says. "He is looking at it from a long-term point of view and believes things will pick up, but for many of the retailers it's a lot more immediate than that."

The general feeling within the centre is that there aren't going to be any knights in shining armour riding in to rescue the disconcerted leaseholders.

Several outlets have been on the market for over a year with no acceptable offers and little interest in them.

This question is going to become even more pressing when the new €100 million shopping complex on South King Street is built and either helps to boost trade in the surrounding area, or further diverts shoppers away from the St Stephen's Green centre.

The odds are that the South King Street scheme - likely to be anchored by Zara - will draw considerably more younger buyers into the area. The experts say that this is bound to benefit the older centre.