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 Post subject: Retail Watch Thread / The Death of retail ....
PostPosted: Wed Apr 29, 2009 6:15 am 
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Rent rise of 48.5% secured on Grafton Street
http://www.irishtimes.com/newspaper/com ... 81295.html

With traders on the street agitating for lower rents, the David Daly-owned shop occupied by Wallis has had its rent upped from €530,000 to €787,000, writes JACK FAGAN .
With traders on Dublin’s Grafton Street due to launch a campaign today to persuade landlords to agree to a reduction in rents, the owner of the Wallis store has just been awarded a rent increase of 48.5 per cent.
Property developer David Daly, who owns the building occupied by the UK fashion trader near the bottom of the street, had earlier been awarded a rise of only 2.5 per cent on the rent of the adjoining River Island store which he also owns.
Traders on the street are to press for an end to upwards-only rent reviews, as well as an immediate cut in rents, because of the fall off in consumer spending on Dublin’s main high street.
Mr Daly bought the River Island and Wallis retail investments at the peak of the property boom in September 2007 for around €115 million.
>>>>


Quote:
Grafton Street traders lobby for lower rents
Wednesday, April 29, 2009

Some traders on Grafton Street have had enough of high rents and are organising to resist the practice of upwards-only rent reviews, writes JACK FAGAN .

Traders in Dublin’s Grafton Street are meeting today to lobby for an end to upwards-only rent reviews and to mount a co-ordinated campaign to persuade landlords to reduce rents during the present recession.
The move comes at a time when many stores are reporting a sharp decline in consumer spending as shoppers concerned about possible job losses stay away from the high streets.
The owners of some shopping centres are also complaining that an increasing number of traders have been defaulting on their rent since the beginning of the year. One shopping centre in the Dublin suburbs has only managed to collect 40 per cent of its rent roll in recent weeks.
The trading difficulties in Grafton Street are likely to be highlighted at today’s meeting which has been called by businessman John Corcoran who has been running a footwear chain for the past 30 years. In recent months he has been attempting to offload the lease of Korky’s footwear store at 47 Grafton Street without success
>>>>


I'll make a prediction that half the business currently on Grafton street will not be there in 5 years time unless the property owners reverse their upwards only rent reviews. Since there are a number of pension funds and Johnny come lately investors involved, they probably can't afford to cut the rent.

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 Post subject: Re: The death of retail on Grafton Street
PostPosted: Wed Apr 29, 2009 7:30 am 
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How long will Wallis last after this?

They should probably just close the store in the morning and relocate somewhere cheaper.


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 Post subject: Re: The death of retail on Grafton Street
PostPosted: Wed Apr 29, 2009 8:53 am 
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Maybe they're still making money with the higher rent, in which case it's an annoyance rather than a problem


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 Post subject: Re: The death of retail on Grafton Street
PostPosted: Wed Apr 29, 2009 9:46 am 
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With traders on Dublin’s Grafton Street due to launch a campaign today to persuade landlords to agree to a reduction in rents, the owner of the Wallis store has just been awarded a rent increase of 48.5 per cent.

Awarded by whom? I find it hard to imagine a landlord requesting such an increase especially at present, and I find it harded to imagine a tenant agreeing to such an increase :shock:


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 Post subject: Re: The death of retail on Grafton Street
PostPosted: Wed Apr 29, 2009 9:48 am 
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Another valuation head scratcher for NAMA, falling rents and tenants on upward only rent reviews starting to grumble. Is the national interest best served by cheaper costs for tenants, or by binding them to bubble rents they can no longer afford. Answers on a postcard.


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 Post subject: Re: The death of retail on Grafton Street
PostPosted: Wed Apr 29, 2009 9:49 am 
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Would it be legal for a landlord and shop to come to an agreement whereby the shop pays a big increase in rent, and then receives a "bonus" back from the landlord? Thus allowing the landlord to say they have got a big rent increase so all you other shops better cough up too!

Could be a good way to try and scare off shop owners from working together?

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 Post subject: Re: The death of retail on Grafton Street
PostPosted: Wed Apr 29, 2009 10:08 am 
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whizzbang wrote:
Would it be legal for a landlord and shop to come to an agreement whereby the shop pays a big increase in rent, and then receives a "bonus" back from the landlord? Thus allowing the landlord to say they have got a big rent increase so all you other shops better cough up too!

Could be a good way to try and scare off shop owners from working together?


this is essentially what happens in every shopping centre around the country

the developer/property company manages to turn at least one tenant,this then gives him his rental evidence to push for an increase on all the other tenants whose reviews are due

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 Post subject: Re: The death of retail on Grafton Street
PostPosted: Wed Apr 29, 2009 10:13 am 
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Anecdotal.

Two clothing shops in the Pavillions swords asked for a rent reduction recently, landlord said no so both shops closed their doors.
Landlord buckled and granted the reduction, both shops are now open again.

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 Post subject: Re: The death of retail on Grafton Street
PostPosted: Wed Apr 29, 2009 10:13 am 
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whizzbang wrote:
Would it be legal for a landlord and shop to come to an agreement whereby the shop pays a big increase in rent, and then receives a "bonus" back from the landlord? Thus allowing the landlord to say they have got a big rent increase so all you other shops better cough up too!

Could be a good way to try and scare off shop owners from working together?


The landlord will try to keep the 'headline rent' high, makes for good comparable evidence in other rent reviews. In some cases there may be an incentive offered like a rent free period etc. I'd guess that the 48% Wallis case is a rent review after five years.


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 Post subject: Re: The death of retail on Grafton Street
PostPosted: Wed Apr 29, 2009 10:14 am 
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I walked through the Hibernian Way off Grafton street yesterday for the first time in ages and the place was deserted. A lot of the shops were closed and the only shop that had a customer was the chocolate place Leonidas. It was weird to see so many closed and empty units. It felt like a ghost town, within spitting distance of Grafton Street.

Each closed retail unit = less foot traffic = more likely next retail unit will close, right?

They should pay people to set up shop in there to give the area a bit of a boost. :shock:


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 Post subject: Re: The death of retail on Grafton Street
PostPosted: Wed Apr 29, 2009 10:36 am 
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Who is the landlord for Grafton Street? Isn't it the Duke of Buckinghamshire or someone like that?

And this line from the piece makes my head spin:

Quote:
Mr Daly bought the River Island and Wallis retail investments at the peak of the property boom in September 2007 for around €115 million.


How on earth do you hope to sell enough jeans and blouses to recoup that, even on Grafton Street? I simply do not understand it.


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 Post subject: Re: The death of retail on Grafton Street
PostPosted: Wed Apr 29, 2009 10:40 am 
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I am probably mixing them up with some other clothes shop that Mrs MW favours but weren't Wallis in financial trouble around Christmas time?

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 Post subject: Re: The death of retail on Grafton Street
PostPosted: Wed Apr 29, 2009 11:16 am 
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Quote:
With traders on the street agitating for lower rents, the David Daly-owned shop occupied by Wallis has had its rent upped from €530,000 to €787,000, writes JACK FAGAN .

---

Mr Daly bought the River Island and Wallis retail investments at the peak of the property boom in September 2007 for around €115 million.


The article doesn't say what the rent on the River Island store is, and having never been in there I don't know if it's the same size as the Wallis store. But let's pretend the rent is roughly the same on each.

so 530K x 2 = 1,060,000 a year in rent.
It cost 115,000,000
So a yield of less than 1%

If we take the 787K figure for rent, the yield is still less than 1.5%

Add to that the collapse in the value of property.
Add to that the difficulty in collecting rent from tennants.
Add to that the number of businesses that will close their doors, or move elsewhere.

(perhaps 'Subtract From That' would be more appropriate.)

It's not a pretty picture.

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 Post subject: Re: The death of retail on Grafton Street
PostPosted: Wed Apr 29, 2009 12:00 pm 
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These would be the Anglo commercial loans that Mr. FitzCapitalP was so sure would not be affected by the downturn then? :roll:

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 Post subject: Re: The death of retail on Grafton Street
PostPosted: Wed Apr 29, 2009 9:54 pm 
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There are now four empty shops at the entrance to Stephen's Green shopping centre, giving the place a rather desolate feel as you walk in.

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