IT: Dundrum centre seeks rent increase

*****Orr would be crazy to fly more missions and sane if he didn’t, but if he was sane he had to fly them. If he flew them he was crazy and didn’t have to; but if he didn’t want to he was sane and had to. Yossarian was moved very deeply by the absolute simplicity of this clause of Catch-22 and let out a respectful whistle.

Dundrum Centre rents astonish me. An extreme example is House of Frazer from this March 2010 article: … 84904.html

€2.4m rent is €6,500 per day. I have absolutely no idea how it is possible to sell that much product. 65 x €100 sales every day, 365 days a year just to pay the rent? I’m sorry, I can’t get my head around how that is even possible.

Same article:

Again, close on €1,000 per day every day to pay the rent for average units there. It is mind-boggling. No wonder Lacoste got out, but perhaps a surprise Mexx took up their lease at an increased rent, reported in April 2010!!!: … 23142.html

Meanwhile this report on Harvey Nichols from Feb 2010: … 00052.html

Not bloody surprising considering the rent! You also have to ask how in Christ’s name they turn that around. That is a massive shortfall. I don’t even know how it would be possible in a booming ecomomy.

Perhaps my layman’s knowledge of retail is miles off, and people are indeed spending at these levels and sustaining these rents, which are rising if today’s report is correct! I just can’t really believe any of it.

House of frazer is a huge upmarket department store selling clothes, home ware, jewellery and cosmetics (and other stuff).

I can see them easily selling that amount per day and more. Making 6,500 profit per day in order to cover the rent after other costs though… the mind boggles.

I agree with you Carlos and can well imagine HoF taking in a lot of money.

But €6,500 a day, 365 days a year is gone out the door *before *you pay rates, salaries & benefits, tax, electricity, suppliers, insurance, accountants, legal fees, shopfitting/maintenance/cleaning…and there must be 100 other costs I’m not even thinking of. Only then do you start moving into profit.

No matter how swanky HoF might be, I still can’t get my head around it.

Maybe you should view this from a different perspective, think of it from what the mark up is on the different goods to make this kind of profit, say womens clothing or jewellery etc the mark up is huge.

I’ve no problem with Dundrum seeking rent increases.
If it forces tenants out and no new tenants come in, then eventually rents will fall.
If new tenants do come in at the higher rent level, then they can only do so by increasing prices to their customers.

So, like always, it comes down to wheather or not customers are stupid enough to pay the higher prices.
In the end, it always comes back to the customer.

I agree with this for the most part. However, if the owners are trying to pull some sort of stunt to increase the valuation that NAMA places on the loans then that is not allowing market forces to set the price. In this case, they are forcing viable business to close and employees to lose their jobs. I know that the business will go elsewhere and hopefully mean increased employment but it does stink somewhat.

A number of empty shop fronts and Dundrum would be about as prestigious as nutgrove. They would be cutting off their own nose to spite their face… but then again we do live in upside-down world, where profits are theirs and losses are ours and we all owe money for the sins of others.

Yep, tenants will pay the money (which we pay them, usually) or they will not pay the money and then we will pay anyway.

Dundrum is horrible and very claustrophobic the only reason I go is for the flicks, the carpark is some circle of awfulness. … 52038.html

This ‘story’ is more than ten months old. Tenants would have known for more than three years that they were facing rent increases of this amount and could have sold the leases on if they couldn’t afford the rent. The vast majority of retailers in dundrum are international multiples, many of which have been price gouging for years. The house of fraser is profitable. Harvey nicks isn’t because of what it’s selling - its selection is weird. But despite their losses they recently opened a second unit there so can’t be too unhappy. There’s nothing fishy about the rent increases, it’s standard after five years. That said the tenants might want to ask for any side letters to see if the rents are real or headline

Aren’t rent review clauses based on market value or would they have had an amount stipulated? I have seen leases with both so often wonder why, if a lease has an upward only review clause, the rent couldn’t go up by 1% for example. Did all the guys who give out about these clauses (and always seem to be facing 50% increases) sign up to actually pay an extra 50% after 3 (or 5 or whatever) years. Was the initial rent then just a teaser and is the landlord then not “seeking an increase” but simply seeking compliance with the terms agreed?

The cynic in me wonders if this isn’t the equivalent of getting revised PP for 200 more houses on 50 acres of worthless bog in Roscommon a developer paid over the odds for …

An necessary prerequisite for entry to NAMA :angry:

No it’s based on rental evidence so it’s what others have agreed to pay in the past. Between the very first tenants signing and dundrum actually opening the asking rents went up 50% because of the demand. Since it opened they’ve increased further. Any retailer who claims they never expected this is lying.

Yields, though, are calculated from the most recent rents settled, no?

So if this level had been agreed by previous tenants, that would set the yield with the other tenants catching up at their next rent review. So in terms of, say, yields ‘recovering’, or buildings ‘performing’, what we’re seeing is some agreeing to rents which will be unsustainable for other businesses?
(Not specifically relating to Dundrum, but generally).

Am posting from phone so apologies in advance. Yogan not always, there’s an initial yield based on current rent roll and an equivalent yield based on rental evidence so it depends which one you’re asking but in dundrum’s case basically every extra euro in sent roll adds e14 approx to value (as i’m sure you know) people also should know that the rent reviews are always well below open market rates. I don’t wanna talk too much about dundrum though

The difference is these guys can pay and those that can’t could have sold their lease for a handsome profit until recently. some of the bigger ones have so many units they can fight back but it’s all negotiations and arbitration. The leases and rent increases are standard practice - a certain irish landlord in london took a higher rent and no upfront premium from a new retail tenant because he owned nearby stores. The higher rent would be rental evidence when the other stores came up for rent review.

Thank you for that, no I didn’t know any of that!

‘I’m forever blowing bubbles…’

It never ends, this practice of always, always trying to find someone to screw.

How could rents have gone up so much since 2005? Surely the rents signed-up to 5 years ago constituted every last penny the landlord could get from tenants at that time, and trading conditions can’t possibly have improved?

Also, what’s “rental evidence” given there is no historical precedent on rents for DSC?

Could you explain the €1/€14 thing?

On businesses selling their lease before they face a rent rise they can’t handle, why would another business buy such a lease in 2010 knowing that they’ll be locked into an upward-only rent review in a time of stalling consumer spending and poor commercial yields? They also know that there is a sitting tenant looking to offload their lease!

Finally, how are rent reviews below market rates? I don’t really get what you mean.