Prime retail rents on Dublin's Grafton Street on the rise again
Published 23/07/2014 | 02:30
IRELAND'S controversial upward only rent review was put firmly back in the spotlight when Bewley's lost a legal challenge against the €1.46m it hands over each year.
It's not even a month since our Supreme Court ruled that the iconic cafe remains tied to its boom-time contract with landlord Ickendel Limited for another three years. Ickendel is controlled by developer Johnny Ronan and NAMA.
But what's happening on the ground?
Rents, according to the Cushman & Wakefield survey, were $288 (€214) per square foot on Ireland's most expensive street, Grafton Street, last year. More than 10 times less than Hong Kong's Causeway Bay which topped the table at €3,017 per square foot a year.
New York's Fifth Avenue demanded $2,500, with $1,601 paid in Avenue des Champs-Elysees, Paris. A square foot in London's New Bond Street cost $1,047 a year.
While we were 23rd on the list comparing premier streets in 25 countries, Dublin does not feature among the top 50 costliest shopping districts in the world.
New York boasted four streets and Hong Kong had three, with London, Paris and Japan having one each.
While business groups are constantly demanding lower rents, they have fallen on Grafton Street, according to Hannah Dwyer, research analyst at Jones Lang LaSalle, and are slowly climbing again.
Zone A space - prime, quality street frontage - is now €460 a square foot, she said. Less for back and storage areas.
While Bewley's is stuck for the moment, McDonald's managed to slash its bill by 47pc to €600,000 when its 35-year lease came up for renewal. The fast food chain is paying €450 per square foot for its Zone A rent, down from €937.
Elsewhere the recently opened clothes store Massimo Dutti got its rent down €865,000, and Ecco's was more than halved to €210,000.
"There was a period of stabilisation," Mr Dwyer continued. "The market bottomed and since then we've seen a small level of rental increases for prime quality.
"The issue you'll see with Grafton Street is that there is not a huge amount of units available at the moment, so we expect to see some further rental growth in the next six to 12 months."
It appears Hong Kong retailers may be bracing for the same falls in consumer spending that was inflicted on retailers here.
Sales there fell in March for the first time since 2009, and dropped another 9.5pc in April, as Chinese consumers - facing slowing economic growth at home - shifted their spending to daily necessities instead of luxury bags. Rising tensions between local residents and the millions of tourists who flock across the border prompted the city's chief executive Leung Chun-ying to consider limiting their arrivals.
The move could cost Hong Kong as much as $3.2bn in sales and spark a drop of as much as 10pc in rents.