The success of the newly opened Gaiety Centre on South King Street may inspire a similar scheme on Dawson Street, writes Gretchen Friemann

GARRETT KELLEHER, the businessman behind the Chicago Spire, is hoping to replicate the success of the recently opened Gaiety Centre on South King Street by developing a similar shopping mall in the former Royal Sun and Alliance building on Dawson Street.

It is understood that Shelbourne Development, Kelleher's property firm, has commissioned a team of architects for the project and is considering submitting a planning application within the next six months.

The company has already received the green light from the local authority to convert part of the ground floor office space into a 186sq m (2,000sq ft) café, which has been let to Costa Coffee on a short-term lease, and industry experts claim this new retail outlet will strengthen Shelbourne's case for a redevelopment of the site.

However it is expected that Dublin City Council will support a South King Street-style scheme at the former Royal Sun and Alliance building not only because it is keen to broaden the capital's retail appeal and reverse the consumer exodus to suburban shopping malls, but also because the site is one of the few in the Grafton Street area able to accommodate the larger-scale floorplates demanded by international fashion multiples.

Yet in this dismal economic climate, securing planning permission may be the least of Shelbourne's concerns. The company purchased the property for between €58 and €63 million in 2005 and well-placed sources claim its development could cost a further €100 million.

Before the credit crunch, banks were keen to support such speculative ventures but liquidity constraints and the risk-averse investment environment mean that funding is often contingent upon the developer securing pre-letting deals. Few retailers, however, will commit to a scheme that is years away from completion, and as one industry expert points out, this "chicken and egg situation" has resulted in many projects failing to move off the blueprints.

It is understood that Shelbourne has yet to decide whether or not to demolish the block, which sits on the corner of Dawson Street and Molesworth Street and houses the Government Publications office.

The property was constructed in the 1970s and is regarded by many as an eyesore.

According to one source close to the company: "It may make more financial sense simply to remodel the existing building and replace its façade in the same way that 75 St Stephen's Green was developed." He claims there would be "plenty of room to extend as a surface carpark at the rear of the property means the current site coverage is only 45 to 50 per cent".

However some industry experts doubt whether Shelbourne's scheme will prove as attractive to retailers as the Gaiety Centre on South King Street, which was developed by Joe O'Reilly's firm, Chartered Land.

One property agent argues the building's position "across the road from Grafton Street" makes it more difficult to lure shoppers away from the main thoroughfare.

Others point out the routing of the Luas down Dawson Street will transform the area's retail landscape and boost footfall.

While Dawson Street may not be the easiest pitch for fashion traders, it is at the centre of Dublin's café culture.

And the decision by the UK's largest coffee chain, Costa Coffee, to open its first central Dublin store there will reinforce that reputation. It is also likely to precipitate a turf war between two of the world's biggest coffee chains as Costa Coffee's greatest global competitor, Starbucks, operates an outlet across the road.

Although Costa Coffee will occupy the new unit in the former Royal Sun and Alliance building on a short-term lease, it is understood the company agreed to the deal because of the comparatively low rent. It also offers Costa, which has over 20 outlets throughout the country, an opportunity to establish its brand in the capital.

Costa Coffee is owned by the UK hospitality giant Whitbread. In Ireland the chain is operated by MBCC Foods (Ireland), which also manages the KFC and Pizza Hut franchises. The parent of MBCC is Tuli (Holdings) Ireland, which is owned by the members of the Tuli family. The group's interests include the clothing retail business The Jean Scene (Ireland) and a property rental business, BR Properties.