independent

Friday 18 April 2014

Shoe shop Korky's loses eight-year battle against rising rents

A well-known shoe shop has closed for the last time after an epic eight-year battle against 'upward-only rents'.

Korky's on Grafton Street in Dublin has shut with the loss of eight jobs, but outlets on Henry Street and the Ilac Centre in Dublin and in Cork city will remain open.

Korky's had been in business on Grafton Street since 1992.

Owner John Corcoran emerged as a national figure thanks to a high-profile campaign against upward-only rent reviews.

This included hanging banners from the Grafton Street building and winning support for the cause from Fine Gael and Labour in the run-up to the 2011 general election.

The campaign began when rent on the 900 sq ft Grafton Street shop shot up to €445,000 a year back in 2005, from €210,000 a year.

With 15 years remaining on the lease, Mr Corcoran could not hand back the keys without being left with a multi-million euro bill for future rent. At one point, he offered €300,000 to anyone who would take the lease off his hands, without success.

"There could never have been the commercial property bubble we had without the upward-only leases," Mr Corcoran said.

That's because property investors paid way over the odds for buildings based on a belief that rents would always rise and tenants in long-term contracts would always pay, he said.

The shutters were pulled down on the store for the last time after Mr Corcoran and landlord Canada Life agreed a deal freeing the company from its €445,000 a year lease early.

Details of the deal are confidential but it is understood that Canada Life agreed to break the lease eight years early.

Relief

This means the remaining Korky's shops will be unaffected by the closure.

Finally closing the shop was "a happy relief", Mr Corcoran said, comparing it to the death of an elderly relative who had been in terrible pain.

Until now Mr Corcoran has been forced to keep the store open even as it lost money, just to meet the rent bill.

Upward-only contracts have been illegal for new leases since 2009, in large measure thanks to Mr Corcoran's campaign.

Ironically, Korky's did not benefit, because the harsh leases have only been banned for new tenants.

During the 2011 general election, the campaign against upward-only rents for older leases was backed by both Fine Gael and the Labour.

Labour TDs, among them Pat Rabbitte, even campaigned with Mr Corcoran during the election.

After the election, however, the Coalition Government rowed back on its pledge to scrap the controversial leases after receiving legal advice that existing contracts could not be broken.

Irish Independent

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