THE CAMPAIGN to persuade the Government to end upwards-only rent reviews on retail leases was launched yesterday by the newly established group Grafton Street Traders (GST) when it criticised landlords for refusing to offer concessions to traders in trouble.
GST represents 29 traders in the street, including Aldo, A-Wear, O2, Pamela Scott, Tommy Hilfiger, Topman, Hickeys Pharmacies, Wallis, La Senza, Vera Moda and Zerep. It wants an end to upwards-only reviews in favour of a fine (a year’s rent) to surrender upwards-only leases and a payment (six months rent) to convert the upwards-only leases to market rent leases.
GST said that, under the present system, rent cannot fall, ignoring the fact that turnovers have collapsed. This was anti-competitive and acted as a break on economic activity. “The street has been debased and degraded by vacant shops and a proliferation of auctioneers boards.”
Action is required from the Minister for Justice, Equality and Law Reform, GST said.
The move comes in the same week as Larry Brennan, retail specialist with agent Savills, said that Ireland had become too expensive and it was no longer possible for a city the size of Dublin to sustain rental returns or leasehold premium values on a par with world capitals like London, Paris or Tokyo.
Writing in the company's Property Outlook, he said scarcity of opportunities in the Dublin market had allowed property owners to maintain lease terms and structures that were unlikely to be found elsewhere in Europe.
Brennan predicted that Dublin could now be open for business to a new market of potential occupiers who had been dissuaded from coming here due to high rents and restrictive lease terms.
He cited the opening of Gap at Dundrum Town Centre as an example of a company availing of the new trading conditions. Gap, he said, had been tracking the Irish market since the early 1990s but had only now made its move, securing an opportunity to get a foothold in a premier location.
Brennan said that, for the first time in a decade, there are increased vacancy rates in both shopping centres and high streets.
The comments come at a time when an ever-increasing number of traders are vacating shopping centres and some streets because of a decline in consumer spending and high rents.
One trader with about 15 stores who recently announced plans to close three of his fashion outlets in struggling provincial shopping centres (two of them within 30 miles of Dublin) has been offered a rent-free arrangement in one of the centres for the foreseeable future as long as he pays the service charges. The same centre is already threatened with the closure of a major UK multiple.
Landlords operating shopping centres are also under increasing pressure from incoming traders to settle for around 10 per cent of turnover rather than a fixed rent, or either 50 to 70 per cent of the usual rent and the balance based on turnover. International firms, like Zara, have been at the forefront of the campaign to force landlords to settle for a percentage of turnover rather than a fixed rent.
“What has potentially changed is our attitude to leasing. We are now more open for business and receptive to tenant needs which will see Ireland move to a more European-style of leasing structure with a healthier, more varied and vibrant retail industry,” said Brennan.
