Retailers face rent hikes of €100,000
Published 20/03/2011 | 05:00
About 19 million people walked through the doors of the Dundrum Town Centre in south Dublin last year.
But the increase in footfall means many retailers in the shopping centre are facing massive rent hikes of more than €100,000 a year under the controversial arbitration system on commercial rents.
According to David Fitzsimons, chief executive of Retail Excellence Ireland (REI), the arbitration system needs to be completely overhauled.
Last week it emerged that fashion retailers Oasis and Coast have been hit with rent increases of 51.5 per cent and 55 per cent respectively.
It means the rent paid by Oasis will be increased from €209,868 to €317,952, with Coast having to pay €324,850 -- up from €210,000.
Another 45 retailers in Dundrum are now waiting for a decision on arbitration, but after the precedent set in the cases of Oasis and Coast all now expect hefty increases.
Ladies fashion outlet Pamela Scotts is expecting the results of its arbitration case this week. According to REI, the Dundrum Town Centre's management began the first round of rent reviews late last year, seeking rent increases of up to 80 per cent. That large demand led many of the centre's tenants to seek arbitration.
"It is an absolute disgrace that in the 36th month of consecutive decline in the Irish retail industry, when sales levels have fallen over 30 per cent, the allegedly independent arbitration system can come back with recommendations that these retailers' rents should increase by over 40 per cent," says Mr Fitzsimons.
"Over 45,000 people have lost their jobs in the retail industry over the past 30 months and over 400 stores are closing each month. If the unrealistic commercial rents being demanded by many landlords are not lowered significantly, considerable numbers of retailers will continue to close and large numbers of jobs will be lost."
"We are clear about the changes that need to take place: the ban on upwards only rent reviews for existing leases needs to be introduced and the arbitration system needs to be completely overhauled."
Meanwhile, last week nearly 100 jobs were lost at Total Fitness, which operated three large gyms in Dublin. A liquidator will be appointed in the coming days.
The company had employed 80 full-time staff at its Castleknock, Malahide Road and Sandyford facilities, and approximately 20 part-time staff. A spokeswoman for the company blamed high rents for the collapse of the business.
"The company was advised the rents were significantly above market rates and, in order to safeguard the future of the clubs, numerous attempts were made to speak with the landlord to revise the leases of the properties," she said.
"Regrettably, the closures have resulted in 80 redundancies across the three clubs, and staff have been informed."
According to Mr Fitzsimons: "The new Government has given a commitment to introduce measures to ban upwards only rent reviews. This will be crucial if Ireland's retail sector, which employs over 255,000, is to stop haemorrhaging jobs."