Leases on key Belfast stores outstrip the prices in Dublin. Spanish fashion chain Zara paid a premium of £1 million for the store being vacated by Habitat in Belfast city centre. Eason's paid £1 million to take over the Next store. Industry sources in Belfast are reporting that two premiums of £1 million sterling are being paid for leases on key retail units almost opposite one another in Donegall Place.
Zara, the Spanish fashion giant, is expected to pay a record premium of £1 million for the 23,500 sq ft store that is being vacated by Habitat in Belfast city centre.
Across the street, it is understood that Eason's is also paying £1 million for the 18,000 sq ft shop being vacated by Next.
The biggest key money paid for a retail unit in Dublin is understood to be £600,000 (#763,000) for a shop in Grafton Street. It is understood that the Zone A rental on the Belfast property is in the region of £200 sterling per sq ft. The annual rental is £365,000.
Eason's is taking up the challenge laid down by WH Smith, which has acquired 23,000 sq ft of retail space a few doors up from the departing Next shop on the site of the former C&A store in Donegall Place. While there is a big demand for large prime stores in Belfast, the market for small shops is in trouble, with about 80 units in both primary and secondary locations on the market. UK agents representing Zara have been looking for prime sites in Dublin and Belfast since last year.
While they are not making any direct comment on the deal, Mr Chris Dennis of London agents Harper Dennis Hobbs said: "You can take it that if there is a large prime outlet, yes, we will be interested." It is understood that the agents began looking seriously at Belfast when Habitat announced last month it was closing its outlet in McAuley House, the former Anderson and McAuley department store in Donegall Place, Belfast's prime retail street. Rental on the 23,500 sq ft Habitat store currently stands at £515,000 per annum. According to local industry sources, the Zone A rental level in the new letting is likely to be over £200.
Zara already has seven outlets in the UK and its representatives have been in touch with Irish commercial letting agents about acquiring a major outlet in Dublin. Two weeks ago, the parent company Inditex was floated for a reported IR£8.6 billion (#10.9 billion). Zara has 450 stores in 29 countries and a team of more than 200 designers. It offers a range of fashion on a par with retail giant H&M, and is aimed chiefly at the 15 to 40-year-old market. Local agents Campbell Cairns are representing the McAuley House owners, the Northern Ireland Local Government Officers' Superannuation Committee (NILGOSC). It manages an investment fund of £2.5 billion to provide pensions for the staff of more than 20 0 employers.
The Anderson and McAuley building was rebranded as McAuley House in 1997 with five retail units, the largest of which was the Habitat outlet. NILGOSC bought the building from Anglia & General in 1994 for £14 million. Two years ago, NILGOSC sold the Park Centre at Donegall Road in west Belfast. It has been acquired by an unnamed private investor from the Republic for £11.1 million. The shopping centre, in which Dunnes Stores is the anchor tenant, was put on the market a year ago with an asking price of £11.8 million.
The Zara chain began 25 years ago and is part of the family-owned Inditex Group, which has its headquarters in La Coruna in Spain. The parent group is made up of five retail chains: Pull and Bear, Massimo Dutti, Bersihka, Stradivarius and Zara. Inditex opened its first UK store in Regent Street three years ago. Its 1,001st store worldwide was opened in October on Oxford Street, London. Last week, Inditex floated on the Madrid stock exchange, turning its 65-year-old founder, Sr Amancio Ortega, into Spain's richest man.
Letting agents for both C&A and Next in Belfast, Osborne King, also announced that fashion and lifestyle retailer, Next, would be moving into a 46,000 sq ft unit on the former C&A site. The former C&A store is being split into two units. The lettings in the redeveloped C&A site reflect a record Zone A rental level of £250.
It is understood that the large premium from Eason's is offsetting the initial rental level. At its two other outlets in Castlecourt and Ann Street, Eason's is expected to continue trading. Announcing that Eason's had agreed to pay a record lease premium for the Donegall Place unit, Osbourne King's Colin Mathewson said: "The record premium that has been achieved in respect of this lease reflects the strong demand currently for prime-location retail space of this calibre whilst underlining, at the same time, the tremendous dearth of large retail floor area within the city centre."
The new WH Smith store is scheduled to open for business in September of this year. This will be the first time in 115 years that the British retailer will have traded anywhere in Ireland since 1886. In that year, the company sold an existing business in Dublin to Charles Eason. The new Eason's outlet, which will be the company's flagship Northern Ireland store, is expected to open by the end of this year.
C&A is to retain ownership of the 40/46 Donegall Place site through its property company, Redevco UK. Zone A rentals in the very limited prime shopping area in Belfast city centre from Donegall Place to Castlecourt Shopping centre have continued to keep pace with top rental levels in Dublin.
Last summer, US sportswear retailer Footlocker paid £215 for a unit also located in Donegall Place. Retailers such as Karen Millen, Oasis, Going Places and Orange have paid premiums of between £115,000 and £150,000 for Donegall Place leases. In March this year it was announced that the fashion chain New Look is renting another former C&A store, on Ann Street, for £190,000. Osborne King was also involved in letting the 27,150 sq ft shop.
