With the Dublin property investment market possibly strengthened rather than weakened by the volatility on world stock exchanges, financial institutions and private investors will be in competition for a particularly fine retail building in Dublin's Grafton Street which is to be sold by tender on November 5th.
Joint selling agents Druker Fanning & Partners and Healey & Baker in London are likely to secure in excess of £3 million for Number 83 Grafton Street, which is occupied by a shoe retailer, Nine West, at a rent of £145,600 per annum. The four-storey over basement building is being sold by the British Shoe Corporation, part of the Sears Group, following a decision to rationalise its property portfolio.
Property values in Grafton Street have soared in the past few years because of the huge demand for shops, mainly from UK traders anxious to capitalise on Dublin's buoyant retail spending.
The opening of the new Brown Thomas and Marks and Spencer stores, along with more multi-storey car parks in the area, has further strengthened Grafton Street's dominant position at the top end of the retail market. Unlike Henry Street, Grafton Street is unlikely to be affected to any significant extent by the opening later this month of yet another major out-of-town shopping centre, Liffey Valley, in west Dublin.
The Grafton Street shop going for sale is located along what is acknowledged as the best trading pitch on Grafton Street - between Wicklow Street and Johnson Court, diagonally opposite Marks and Spencer. The building has the distinct advantage of having a large ground floor and a good display frontage, features that are all important to international traders. The ground floor has 1,485 sq ft and there is 1,360 sq ft of storage space in the basement. Each of the three upper floors has more than 500 sq ft.
The entire building is let on a single full repairing and insuring lease to The Shoe Studio Group and the lease is guaranteed by the parent company, Nine West Group, a US-based corporation that operates over 1,000 outlets worldwide. There are five-year upwards-only rent reviews, with the next review due in the year 2002. The current rent equates to just under £200 per sq ft for Zone A, which is now the norm in Grafton Street.
With the investment market at its strongest for years, it will be no great surprise if the sale sets a new investment benchmark for the street. The last two retail buildings offered for sale on Grafton Street were acquired by the tenants, Marathon Sports and Burger King. Marathon Sports has just completed contracts to buy its store at 40 Grafton Street for £3.25 million, £450,000 higher than the guide price. Marathon has been paying a rent of £100,000 - or £175 per sq ft for Zone A - for a shop of 955 sq ft and a basement. An additional £14,000 has come from three upper floors, but Marathon has since acquired the lease of this space to give it control of the entire building. Although the initial yield in this case is only 3.5 per cent, this would automatically have increased had a pending rent review taken place. A year ago, Burger King paid £3.4 million for its Grafton Street building in a deal which equated to a yield of 3.4 per cent.
Grafton Street yields have been steadily slipping since 1994, but back in 1989, Norwich Union had to settle for a yield of 3.7 per cent when it bought the small Tie Rack unit. However, there was a rent review in the offing at that stage so the equivalent yield was, in fact, 4.5 per cent.
