Investor pays £3.6 m for Grafton Street prime retail outlet

An investor is believed to have paid in the region of £3

An investor is believed to have paid in the region of £3.6 million for a retail building on Dublin's Grafton Street, equating to a yield of around 4 per cent.

The sale underlines the buoyant property values in Dublin's premier shopping street, largely because of the intense competition for trading outlets among UK multiples.

The sale has not, however, set an investment benchmark on the street, because the two previous retail buildings that achieved lower yields were acquired by the tenants. It is understood that three institutions and two or three private investors tendered for Number 83 Grafton Street, which is occupied by a shoe retailer, Nine West, at a rent of £145,600 per annum.

Joint agents Druker Fanning & Partners and Healey and Baker refused to comment on the sale.

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The four-storey over basement building is being sold by the British Shoe Corporation, part of the Sears group, to capitalise on the high property values in Dublin. The current rent of almost £200 per sq ft for Zone A is in line generally with rents in the street. The shop is located along what is one of the strongest trading areas in Grafton Street - between Wicklow Street and Johnson Court, diagonally opposite Marks and Spencer. The building has a larger than usual ground floor of 1,485 sq ft and 1,360 sq ft 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. The yield achieved is similar to that in the case of Marathon Sports, which recently bought the store it occupies at 40 Grafton Street for £3.25 million. Marathon had 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.

The company has since bought in the lease of the three upper floors, which had been rented at £14,000 per year. The initial yield was only 3.5 per cent, but this would clearly have changed had a pending rent review taken place.

More than 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.

There have been relatively few changes among Grafton Street traders over the past year. The street has clearly benefited from the strong economy and the continuing success of the St Stephen's Green shopping centre, now 10 years old.